114 32 Law Book Revised

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Arizona Real Estate Laws ........................................................................................................................... 22
CONSTITUTION OF THE STATE OF ARIZONA ....................................................................................... 22
Article 26. RIGHT OF LICENSED REAL ESTATE BROKERS AND SALESMAEN TO PREPARE
INSTRUMENTS INCIDENT TO PROPERTY TRANSACTIONS ............................................................ 22
§ 1. Powers of real estate broker or salesman .................................................................................... 22
Title 32, Chapter 20 REAL ESTATE ........................................................................................................... 22
Article 1 Real Estate Department ............................................................................................................ 22
32-2101. Definitions ............................................................................................................................. 22
32-2102. Administration of chapter by real estate department; purpose............................................. 28
32-2103. Placement of monies collected; revision of fees .................................................................. 28
32-2104. Real estate advisory board; members; terms; qualifications; compensation; chairman;
duties.................................................................................................................................................... 28
32-2105. Meetings of the state real estate advisory board.................................................................. 29
32-2106. Real estate commissioner; appointment; qualifications ....................................................... 29
32-2107. Powers and duties of commissioner; compensation; administration of department; seal;
revolving fund ....................................................................................................................................... 29
32-2107.01. Recorded disclaimer of unlawful restrictions ................................................................... 30
32-2108. Powers and duties of commissioner to make investigations and require information.......... 30
32-2108.01. License applicants; fingerprint clearance cards; definition .............................................. 31
32-2109. Employment; compensation ................................................................................................. 31
32-2110. Interest of department officer or employee in real estate company prohibited .................... 31
32-2111. Attorney general as legal adviser and representative of commissioner ............................... 31
32-2112. Admissibility of certified copies of department records in evidence ..................................... 31
32-2114. Recorded disclosure for land under a military training route or restricted air space ............ 32
32-2114.01. Military electronics range ................................................................................................. 32
32-2116. Military training routes; contacts ........................................................................................... 33
32-2117. Earth fissure maps; posting; immunity ................................................................................. 33
32-2118. Competition with private enterprise; prohibition ................................................................... 33
32-2119. Consumer education; water supply definitions; map ............................................................ 33
Article 2 Licensing ................................................................................................................................... 34
32-2121. Applicability of article; exemption ......................................................................................... 34
32-2122. License required of brokers and salespersons..................................................................... 35
32-2123. Application for license as broker or salesperson .................................................................. 36
32-2124. Qualifications of licensees .................................................................................................... 37
32-2125. Licenses for corporations, limited liability companies or partnerships ................................. 39
32-2125.01. Issuance of license; multiple licenses; use...................................................................... 40
32-2125.02. Nonresident licensees; service of process; employment ................................................ 40
32-2125.03. Confidentiality of licensee's residential address, electronic mail address, residential
telephone number and social security number .................................................................................... 40
32-2126. Place of business required; notice of change in location; failure to give notice as
cancellation of license; signs ............................................................................................................... 41
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32-2127. Licenses for additional places of business; branch office manager; broker's temporary
absence ............................................................................................................................................... 41
32-2128. Display and possession of license certificate ....................................................................... 41
32-2129. Advance payment of license fees ......................................................................................... 42
32-2130. Renewal of licenses; education requirements; broker licensee renewal as salesperson
licensee ................................................................................................................................................ 42
32-2131. Reinstatement of license ...................................................................................................... 43
32-2132. Fees ...................................................................................................................................... 44
32-2133. Temporary broker's license .................................................................................................. 44
32-2134. Temporary cemetery salesperson's license ......................................................................... 45
32-2134.01. Membership camping salesperson certificate of convenience ........................................ 45
32-2135. Real estate schools; courses of study; instructors; certification ........................................... 45
32-2136. Broker management clinics .................................................................................................. 47
32-2137. Cancellation of license .......................................................................................................... 47
Article 3 Regulation ................................................................................................................................. 47
32-2151. Disposition of funds; trust money deposit requirements ...................................................... 47
32-2151.01. Broker requirements; record keeping requirements; definition ....................................... 48
32-2151.02. Real estate employment agreements; definition ............................................................. 49
32-2152. Action by broker or salesperson to collect compensation .................................................... 49
32-2153. Grounds for denial, suspension or revocation of licenses; letters of concern; provisional
license; retention of jurisdiction by commissioner; definitions ............................................................. 49
32-2153.01. Consent order; terms ....................................................................................................... 52
32-2154. Cease and desist orders; hearing ........................................................................................ 52
32-2155. Restriction on employment or compensation of person as broker or salesperson .............. 52
32-2156. Real estate sales and leases; disclosure ............................................................................. 52
32-2157 Written notice of changes; summary suspensions; hearing; voluntary surrender of license 53
32-2158. Hearing; witnesses; deposition; service of process.............................................................. 53
32-2159. Judicial review; costs; transcript ........................................................................................... 53
32-2160. Filing of complaint by commissioner; prosecution ................................................................ 54
32-2160.01. Civil penalties .................................................................................................................. 54
32-2161. False statements or publications concerning land, subdivision or membership camping
contract for sale or lease; classification; definition .............................................................................. 54
32-2162. Sale of cemetery property for speculation unlawful ............................................................. 55
32-2163. Unlawful acts; out-of-state broker; cooperation agreement ................................................. 55
32-2164. Unlawful subdivision lot sales ............................................................................................... 55
32-2165. Unlicensed activities; violation; classification ....................................................................... 55
32-2166. Activities while incarcerated; violation; classification ........................................................... 56
Article 3.1 Property Management ............................................................................................................ 56
32-2171. Definitions ............................................................................................................................. 56
32-2172. Scope of article ..................................................................................................................... 56

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32-2173. Property management agreements; contents, termination .................................................. 56
32-2174. Property management accounts........................................................................................... 57
32-2175. Property management records; requirements; audits .......................................................... 58
32-2176. Payment of finder fees to apartment tenants; limits; prohibited activities; civil penalty;
definitions ............................................................................................................................................. 58
Article 4 Sale of Subdivided Lands .......................................................................................................... 59
32-2181; Notice to commissioner of intention to subdivide lands; unlawful acting in concert;
exceptions; deed restrictions; definition ............................................................................................... 59
32-2181.01. Power of commissioner to exempt certain subdivisions or fractional interests by special
order ..................................................................................................................................................... 63
32-2181.02. Exempt sales and leases ................................................................................................. 63
32-2181.03. Lot reservations; expiration ............................................................................................. 65
32-2182. Examination of subdivision by commissioner; fee; time limit to determine violation ............ 66
32-2183. Subdivision public reports; denial of issuance; unlawful sales; voidable sale or lease; order
prohibiting sale or lease; investigations; hearings; summary orders ................................................... 66
32-2183.01. Advertising material; contents; order prohibiting use; costs of investigation; drawings or
contests ................................................................................................................................................ 70
32-2183.02. Recording of actions ........................................................................................................ 71
32-2183.03. Civil liabilities ................................................................................................................... 72
32-2183.04. Surety bond requirement; form; cancellation; effective date; certificate of deposit ......... 73
32-2183.05. Military training route disclosure; military electronics range disclosure; residential
property ................................................................................................................................................ 73
32-2183.06. Restricted air space disclosure; residential property ....................................................... 74
32-2184. Change of subdivision plan after approval by commissioner; notice ................................... 74
32-2185. Delivery of clear title by vendor on performance of contract by vendee .............................. 75
32-2185.01. Sale of unimproved lots or parcels; conditions precedent; methods ............................... 75
32-2185.02. Permanent access to subdivided land; rescindable sales ............................................... 76
32-2185.03. Deposit of fees ................................................................................................................. 76
32-2185.06. Contract disclosures; contract disclaimers ...................................................................... 77
32-2185.07. Jurisdiction ....................................................................................................................... 77
32-2185.08. Recordable forms of contracts ........................................................................................ 77
32-2185.09. Civil penalties; limitation .................................................................................................. 77
Article 5 Real Estate Recovery Fund ...................................................................................................... 77
32-2186. Real estate recovery fund; liability limits; definitions ............................................................ 77
32-2187. Payments to real estate recovery fund ................................................................................. 78
32-2188. Statute of limitations; service of summons; application for payment; insufficient monies;
definition ............................................................................................................................................... 78
32-2188.01. Notice of claim to judgment debtor; response ................................................................. 81
32-2188.02. Correction of deficiencies in the application .................................................................... 81
32-2188.03. Investigation and discovery ............................................................................................. 82
32-2188.04. Final decision and order on claim; notice ........................................................................ 82

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32-2188.05. Claimant's right to appeal denial of claim; service of notice of appeal; response; failure to
file response ......................................................................................................................................... 83
32-2189. Management of fund ............................................................................................................. 83
32-2191. Commissioner's standing in court ......................................................................................... 83
32-2192. Subrogation of rights; collection ........................................................................................... 83
32-2193. Waiver of rights ..................................................................................................................... 84
32-2193.01. Effect of article on disciplinary action .............................................................................. 84
32-2193.02. Surety bond requirement; form; cancellation; effective date; certificate of deposit ......... 84
Article 6 Organization and Regulation of Cemeteries ............................................................................. 84
32-2194. Exceptions ............................................................................................................................ 84
32-2194.01. Notice to commissioner of intention to sell cemetery property; exceptions; restrictions . 85
32-2194.02. Examination by commissioner; fee .................................................................................. 86
32-2194.03. Issuance or denial of certificate of authority; voidable sale; order prohibiting sale;
investigations by commissioner; public hearings; summary orders .................................................... 86
32-2194.04. Contract disclosures; contract disclaimers ...................................................................... 88
32-2194.05. Advertising material; contents; order prohibiting use ...................................................... 88
32-2194.06. Records of transactions ................................................................................................... 89
32-2194.07. Recording of actions ........................................................................................................ 89
32-2194.08. Administrative penalties................................................................................................... 89
32-2194.09. Civil liabilities ................................................................................................................... 89
32-2194.10. Change of cemetery plan after approval by commissioner; notice; fee .......................... 90
32-2194.11. Delivery of clear title by cemetery of cemetery plots ....................................................... 90
32-2194.12. Permanent access to cemetery land ............................................................................... 90
32-2194.13. Deposit of fees ................................................................................................................. 90
32-2194.14. Cemetery brokers; disclosures ........................................................................................ 90
32-2194.15. Jurisdiction ....................................................................................................................... 90
32-2194.16. Sale of undeveloped cemetery property.......................................................................... 91
32-2194.17. Transaction of cemetery business ................................................................................... 91
32-2194.18. Application for authority to open and operate cemeteries ............................................... 91
32-2194.19. Investigation of applicant before granting of certificate of authority where needed ........ 91
32-2194.20. Right of cemetery to make rules and regulations ............................................................ 91
32-2194.21. Survey of property; maps and plats ................................................................................. 91
32-2194.22. Filing maps and declaration of dedication ....................................................................... 91
32-2194.23. Nonapplication of law against perpetuities ...................................................................... 91
32-2194.24. Trust fund to be established before certificate of authority granted ................................ 91
32-2194.25. Trust fund to be established before existing cemetery can advertise as endowed-care
cemetery .............................................................................................................................................. 92
32-2194.26. Initial deposit required in endowment-care fund.............................................................. 92
32-2194.27. Restrictive use of income from endowed-care fund; obligation....................................... 92
32-2194.28. Deposit in endowed-care fund from sales ....................................................................... 93
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32-2194.29. Posting of signs by cemeteries ........................................................................................ 93
32-2194.30. Restriction on use of care funds ...................................................................................... 93
32-2194.31. Crematories ..................................................................................................................... 93
32-2194.32. Opening and closing of burial places .............................................................................. 93
32-2194.33. Cemetery property owners; address notification reclamation; abandoned cemetery plot
............................................................................................................................................................. 93
Article 7 Sale of Unsubdivided Lands ...................................................................................................... 94
32-2195. Notice to commissioner of intention before offering for sale or lease of unsubdivided land;
definition ............................................................................................................................................... 94
32-2195.01. Power of commissioner to exempt certain unsubdivided land by special order .............. 96
32-2195.02. Examination of unsubdivided land by commissioner; fee ............................................... 96
32-2195.03. Unsubdivided land reports; denial of issuance; order prohibiting sale or lease;
investigations; hearings; summary orders ........................................................................................... 96
32-2195.04. Sale of lots or parcels of unsubdivided lands; conditions precedent; methods............... 98
32-2195.05. Advertising material; contents; order prohibiting use; costs of investigation ................. 100
32-2195.06. Civil liabilities ................................................................................................................. 100
32-2195.07. Jurisdiction ..................................................................................................................... 101
32-2195.09. Recordable forms of contracts ...................................................................................... 101
32-2195.10. Change of plan after approval by commissioner; notice ............................................... 101
32-2195.11. Civil penalties; limitation ................................................................................................ 101
32-2195.12. Recording of actions ...................................................................................................... 102
Article 9 Real Estate Timeshares .......................................................................................................... 102
32-2197. Definitions ........................................................................................................................... 102
32-2197.01. Creation of timeshare plans; ratio ................................................................................. 104
32-2197.02. Notice of intent to sell; application for timeshare plan public report; authorization for presales ................................................................................................................................................... 104
32-2197.03. Rescission of contract or agreement ............................................................................. 106
32-2197.04. Notification of material change ...................................................................................... 106
32-2197.05. Escrow or trust account; agreement; evidence of completion; financial assurance ..... 106
32-2197.06. Declaration of dedication ............................................................................................... 107
32-2197.07. Examination of plan by commissioner; fees .................................................................. 108
32-2197.08. Issuance of public report and amended public report by commissioner on timeshare
plan; denial of issuance; additional information; use of another state's public report ....................... 108
32-2197.09. Rescindable sale or lease ............................................................................................. 112
32-2197.10. Timeshare interest reservations .................................................................................... 112
32-2197.11. Developer supervisory duties ........................................................................................ 113
32-2197.12. Blanket encumbrance; lien; alternative assurance ........................................................ 114
32-2197.13. Hearing on denial of public report ................................................................................. 114
32-2197.14. Investigations; orders; hearings .................................................................................... 114
32-2197.15. Order; appointment of receiver; writ of ne exeat ........................................................... 115

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32-2197.17. Advertising and promotional requirements; telemarketing and promotional employees;
presentations and tours, drawings and contests; commissioner's authority; disclosures ................. 115
32-2197.18. Recording of actions ...................................................................................................... 118
32-2197.19. Civil liabilities; prohibitions; limitations ........................................................................... 118
32-2197.20. Civil penalty ................................................................................................................... 119
32-2197.21. Payment of finder fees; limits; prohibited activities; records; definition ......................... 119
32-2197.22. Exemptions; disclosures; exempt communications ....................................................... 119
32-2197.23. Power of commissioner to exempt timeshare plans ...................................................... 121
32-2197.24. Applicability of article ..................................................................................................... 121
Article 10 Membership Camping ........................................................................................................... 122
32-2198. Unlawful offer or sale of membership camping contract .................................................... 122
32-2198.01. Application for membership camping public report; signature; amendment ................. 122
32-2198.02. Issuance of public report; representations prohibited ................................................... 124
32-2198.03. Exemptions .................................................................................................................... 124
32-2198.04. Examination of project by commissioner ....................................................................... 124
32-2198.05. Contracts; cancellation .................................................................................................. 124
32-2198.06. Execution of notes; assignment; purchaser's defenses retained .................................. 125
32-2198.08. Denial, suspension or revocation of a public report ...................................................... 125
32-2198.09. Fees ............................................................................................................................... 127
32-2198.10. Advertising plans; disclosures; lotteries and drawings .................................................. 127
32-2198.11. Purchaser's remedies .................................................................................................... 128
32-2198.13. Construction of this article ............................................................................................. 128
32-2198.14. Advertising availability of campgrounds to campground members; blanket
encumbrances ................................................................................................................................... 128
Article 11. Administrative Hearings ....................................................................................................... 128
32-2199 Administrative Hearings ....................................................................................................... 128
32-2199.01. Hearing; rights procedures ............................................................................................ 129
32-2199.02. Orders; penalties; disposition ........................................................................................ 129
32-2199.04. Rehearing; appeal ......................................................................................................... 130
32.2199.05. Condominium and planned community hearing office fund .......................................... 130
Arizona Administrative Code, Title 4. Professions and occupations, Chapter 28. State Real Estate
Department................................................................................................................................................ 130
R4-28-101. Definitions ....................................................................................................................... 130
R4-28-102. Document Filing; Computation of Time .......................................................................... 131
R4-28-103. Licensing Time-frames ................................................................................................... 131
R4-28-104. Development Inspection Fee .......................................................................................... 132
Table 1. Time-frames (Calendar Days) ............................................................................................. 133
ARTICLE 3. LICENSURE ...................................................................................................................... 135
R4-28-301. General License Requirements; Non-resident License .................................................. 135
R4-28-302. Employing Broker's License; Non-resident Broker ......................................................... 136
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R4-28-303. License Renewal; Reinstatement; Changes of Personal Information, License, or License
Status; Professional Corporation or Professional Limited Liability Company Licensure; Administrative
Severance .......................................................................................................................................... 139
R4-28-304. Branch Office; Branch Office Manager ........................................................................... 142
R4-28-305. Temporary License, Certificate of Convenience............................................................. 143
R4-28-306. Unlawful License Activity ................................................................................................ 143
ARTICLE 4. EDUCATION ..................................................................................................................... 144
R4-28-401. Prelicensure Education Requirements; Waiver .............................................................. 144
R4-28-402. Continuing Education Requirements; Waiver; Distance Learning.................................. 145
R4-28-403. License Examinations ..................................................................................................... 148
R4-28-404. Real Estate School Requirements, Course and Instructor Approval.............................. 148
R4-28-405. Business Brokerage Specialist Designation ................................................................... 150
ARTICLE 5. ADVERTISING .................................................................................................................. 150
R4-28-502. Advertising by a Licensee ............................................................................................... 150
R4-28-503. Promotional Activities ..................................................................................................... 151
R4-28-504. Development Advertising ................................................................................................ 151
ARTICLE 7. COMPENSATION ............................................................................................................. 152
R4-28-701. Compensation Sharing Disclosure ................................................................................. 152
ARTICLE 8. DOCUMENTS ................................................................................................................... 152
R4-28-802. Conveyance Documents................................................................................................. 153
R4-28-803. Contract Disclosures ....................................................................................................... 153
R4-28-804. Rescission of Contract .................................................................................................... 153
R4-28-805. Public Report Receipt ..................................................................................................... 154
ARTICLE 11. PROFESSIONAL CONDUCT ......................................................................................... 154
R4-28-1101. Duties to Client ............................................................................................................. 154
R4-28-1102. Property Negotiations ................................................................................................... 155
R4-28-1103. Broker Supervision and Control .................................................................................... 155
PART A. APPLICATION FOR PUBLIC REPORT, CERTIFICATE OF AUTHORITY, OR SPECIAL
ORDER OF EXEMPTION ..................................................................................................................... 156
R4-28-A1201. Development Name; Lot Sales; Applicant.................................................................. 156
R4-28-A1202. Development Map; Location; Land Characteristics ................................................... 157
R4-28-A1203. Flood and Drainage; Land Uses; Adverse Conditions ............................................... 157
R4-28-A1204. Utilities ........................................................................................................................ 158
R4-28-A1205. Water Supply .............................................................................................................. 158
R4-28-A1206. Sewage Disposal ........................................................................................................ 159
R4-28-A1207. Streets and Access .................................................................................................... 159
R4-28-A1208. Flood Protection and Drainage Improvements .......................................................... 160
R4-28-A1209. Common, Community, or Recreational Improvements .............................................. 161
R4-28-A1210. Master Planned Community ....................................................................................... 161
R4-28-A1211. Assurances for Completion and Maintenance of Improvements ............................... 161
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R4-28-A1212. Schools and Services ................................................................................................. 163
R4-28-A1213. Property Owners' Association .................................................................................... 163
R4-28-A1214. Development Use ....................................................................................................... 164
R4-28-A1215. Development Sales .................................................................................................... 164
R4-28-A1216. Title Reports and Encumbrances ............................................................................... 164
R4-28-A1217. ADEQ Approval .......................................................................................................... 165
R4-28-A1218. Property Registrations in Other Jurisdictions ............................................................. 165
R4-28-A1219. Condominium Developments ..................................................................................... 165
R4-28-A1220. Foreign Developments ............................................................................................... 165
R4-28-A1221. Cemetery Developments ............................................................................................ 165
R4-28-A1222. Membership Camping Developments ........................................................................ 165
R4-28-A1223. Affidavit ....................................................................................................................... 165
PART B. GENERAL INFORMATION .................................................................................................... 166
R4-28-B1201. Expedited Registration For Improved Subdivision Lots and Unsubdivided Lands .... 166
R4-28-B1202. Conditional Sales Exemption ..................................................................................... 166
R4-28-B1203. Material Change; Public Report Amendments ........................................................... 166
R4-28-B1204. Cemetery Notice; Amendments ................................................................................. 167
R4-28-B1205. Contiguous Parcels .................................................................................................... 167
R4-28-B1206. Filing with HUD ........................................................................................................... 167
R4-28-B1207. Subsequent Owner ..................................................................................................... 168
R4-28-B1208. Public Report Correction ............................................................................................ 168
R4-28-B1209. Options; Blanket Encumbrances; Releases ............................................................... 168
R4-28-B1210. Earnest Money ........................................................................................................... 168
R4-28-B1211. Recordkeeping ........................................................................................................... 169
ARTICLE 13 ADMINISTRATIVE PROCEDURES................................................................................. 169
R4-28-1302. Service of Pleadings Subsequent to Complaint and Notice ......................................... 169
R4-28-1303. Information Obtained in an Investigation ...................................................................... 169
R4-28-1304. Response; Default ........................................................................................................ 169
R4-28-1305. Notice of Appearance of Counsel ................................................................................. 169
R4-28-1310. Rehearing or Review of Decision; Response; Decision ............................................... 169
R4-28-1313. Correction of Clerical Mistakes ..................................................................................... 170
SUBSTANTIVE POLICY STATEMENTS.................................................................................................. 171
No. 2017.01 Unlicensed Assistants ................................................................................................... 171
No. 2016.01 Acceptable Forms of Payment ...................................................................................... 172
No. 2015.01 Short Title: Instructor Professional Development Requirements .................................. 173
No. 2013.01. Short Title: Multifamily Housing Records Retention .................................................... 175
No. 2012.01. Short Title: Broker Management Clinic Course/Instructor Requirements .................... 176
No. 2010.03. Short Title: Real Estate School Audit Declaration ....................................................... 178
No. 2010.02. Short Title: Distance Learning Guidelines .................................................................... 178
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No. 2010.01. Short Title: Guidance for using Electronic Real Estate Transaction Management and/or
Document Storage Programs ............................................................................................................ 180
No. 2008.06 rev. Short Title: Preventing Mortgage Fraud through Disclosure.................................. 182
No. 2008.05 rev. Short Title: Continuing Education Requirements for Renewal of 4-Year License
(REPEALED effective January 29, 2014) .......................................................................................... 183
No. 2008.04 rev. Short Title: Business Brokers; License Requirement Clarification (REPEALED
effective January 27, 2011) ............................................................................................................... 183
No. 2008.03 rev. Short Title: Acceptable Forms of Payment ............................................................ 183
No. 2008.02 rev. Short Title: Subsequent Owners/Subdivision Disclosure Reports (Public Reports)
(REPEALED effective September 13, 2013). .................................................................................... 183
No. 2008.01 rev. Short Title: Pre-license Education Waiver (REPEALED effective March 3, 2011) 183
No. 2007.18 rev. Short Title: Real Estate Licensee Advertising ........................................................ 183
No. 2007.17. Short Title: Electronic License Certificate Complies with Statutory Requirement ....... 184
No. 2006.16 rev. (REPEALED) .......................................................................................................... 184
No. 2005.15. Short Title: Broker Home Office ................................................................................... 185
No. 2005.14. Short Title: Fair Housing Course Substitute................................................................. 185
No. 2005.13. Short Title: Agent Responsibility to Client .................................................................... 186
No. 2005.12. Short Title: Continuing Education and the Residential Resale Purchase Contract
(REPEALED effective January 27, 2011) .......................................................................................... 186
No. 2005.11. Short Title: Subdivision Public Report Application Form, Changes ............................. 186
No. 2005.10. Short Title: Electronic Signatures ................................................................................. 187
No. 2005.09 rev. Short Title: Non-commercial Requests to Inspect Department Records & Fees for
Copies ................................................................................................................................................ 187
No. 2005.07. Short Title: Department Investigation of Cases Involving Civil Litigation ..................... 189
No. 2005.06. Short Title: Electronic Record Keeping ........................................................................ 190
No. 2005.05. Short Title: Access to Arizona Real Estate Law Book on the World Wide Web .......... 191
No. 2005.04. Short Title: Unlicensed Assistants ............................................................................... 191
No. 2005.03. Short Title: Disclosure of Licensee’s Home Address ................................................... 192
No. 2005.02. Short Title: Attendance Requirements for Credit & Enforcement ................................ 192
No. 2005.01.Short Title: Acceptable Forms of Payment ................................................................... 193
Title 11, Chapter 8 DEVELOPMENT FEES .............................................................................................. 194
Article 2 Real Estate Transfer Affidavit and Fee ................................................................................... 194
11-1131. Definitions ........................................................................................................................... 194
11-1132. Real estate transfer fee; collection; disposition of proceeds .............................................. 194
11-1133. Affidavit of legal value ......................................................................................................... 194
11-1134. Exemptions ......................................................................................................................... 195
11-1135. Transmitting affidavit or data to county assessor, Arizona state library, archives and public
records and department of revenue................................................................................................... 196
11-1136. Administrative and enforcement powers of department ..................................................... 196
11-1137. Violations; classification ...................................................................................................... 196
Title 32, Chapter 36 STATE BOARD OF APPRAISAL ............................................................................. 196

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Article 1 General Provisions .................................................................................................................. 196
32-3601. Definitions ........................................................................................................................... 196
32-3602. Applicability of chapter ........................................................................................................ 198
32-3603. Registration, license or certificate use; exception .............................................................. 198
32-3605. Superintendent; duties; powers; immunity ......................................................................... 198
32-3606. Executive director; duties ................................................................................................... 200
32-3607. Fees; use of credit cards .................................................................................................... 200
32-3608. Board of appraisal fund ...................................................................................................... 200
32-3609. Confidential records ............................................................................................................ 201
32-3610. Uniform standards of professional appraisal practice; state standards; exception ............ 201
Article 2 Registration, Licensure, and Certification ............................................................................... 201
32-3611. Registration, licensure and certification process ................................................................ 201
32-3612. Classifications of licensure, registration and certification ................................................... 201
32-3613. Application and qualification requirements for issuance of license .................................... 202
32-3614. Application and qualification requirements for certification ................................................ 202
32-3614.01. Application for registered trainee appraiser certificates ................................................ 202
32-3614.02. Application for supervisory appraiser designation ......................................................... 202
32-3615. Experience requirement for licensure or certification ......................................................... 202
32-3616. Terms of license or certificate............................................................................................. 203
32-3617. Nonresident temporary licensure or certification ................................................................ 203
32-3618. Reciprocity .......................................................................................................................... 203
32-3619. Renewal of license or certificate; fees ................................................................................ 203
32-3620. Basis for denial of a license or certificate ........................................................................... 204
32-3621. Addresses; telephone numbers; notification of change ..................................................... 204
32-3622. Licenses and certificates .................................................................................................... 204
32-3623. Use of term ......................................................................................................................... 204
32-3624. Professional corporations and partnerships ....................................................................... 204
32-3625. Continuing education .......................................................................................................... 205
32-3626. Scarcity determination; resident temporary licenses and certificates; exemption.............. 205
32-3627. Inactive license or certificate status; reactivation application; renewal application and fee;
continuing education .......................................................................................................................... 206
32-3628. Inactive license or certificate status during military duty; reactivation application; renewal
application and fee; continuing education ......................................................................................... 206
Article 3 Regulation ............................................................................................................................... 207
32-3631. Disciplinary proceedings ..................................................................................................... 207
32-3632. Hearing and judicial review................................................................................................. 208
32-3633. Undue influence; classification ........................................................................................... 208
32-3634. Prohibition against discrimination ....................................................................................... 208
32-3635. Standards of practice .......................................................................................................... 208
32-3636. Contingent fees .................................................................................................................. 209
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32-3637. Retention of records; definition ........................................................................................... 209
32-3638. Violation; classification ....................................................................................................... 209
32-3639. Damages; injunctive relief .................................................................................................. 209
32-3640. Prohibition; indemnification agreement .............................................................................. 209
Article 4 Property Tax Agents ................................................................................................................ 209
32-3651. Definitions ........................................................................................................................... 209
32-3652. Registration; renewal; fees ................................................................................................. 210
32-3653. Property tax agent conduct................................................................................................. 210
32-3654. Disciplinary actions ............................................................................................................. 210
32-3655. Rules ................................................................................................................................... 211
32-3656. Confidential records ............................................................................................................ 211
Article 5 Appraisal Management Companies ........................................................................................ 211
32-3661. Definitions ........................................................................................................................... 211
32-3662. Registration......................................................................................................................... 212
32-3663. Exemptions ......................................................................................................................... 213
32-3664. Registration forms .............................................................................................................. 213
32-3665. Expiration of registration ..................................................................................................... 213
32-3666. Consent to service of process ............................................................................................ 213
32-3667. Fee; bond............................................................................................................................ 213
32-3668. Owner requirements ........................................................................................................... 213
32-3669. Controlling person .............................................................................................................. 213
32-3670. Employee requirements...................................................................................................... 214
32-3671. Agreements with independent appraisers; limitations ........................................................ 214
32-3672. Annual certifications ........................................................................................................... 214
32-3673. Disclosure of fees ............................................................................................................... 214
32-3674. Appraiser independence; prohibitions ................................................................................ 214
32-3675. Payment.............................................................................................................................. 215
32-3676. Appraisal reports; alteration; use ........................................................................................ 215
32-3677. Adjudication of disputes ...................................................................................................... 215
32-3678. Enforcement ....................................................................................................................... 216
32-3679. Disciplinary hearings .......................................................................................................... 216
32-3680. Rule making authority ......................................................................................................... 216
ARIZONA ADMINISTRATIVE CODE, Title 4. Professions and Occupations, Chapter 46. Board of
Appraisal. .................................................................................................................................................. 216
Article 1. General Provisions ................................................................................................................. 216
R4-46-101. Definitions ....................................................................................................................... 216
R4-46-102. Powers of Board ............................................................................................................. 218
R4-46-103. Board Records; Public Access; Copying Fees ............................................................... 218
R4-46-106. Fees ................................................................................................................................ 219

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Article 2 Licensing and Certification ...................................................................................................... 219
R4-46-201. Appraiser Qualification Criteria ....................................................................................... 219
R4-46-202. Application for License or Certificate .............................................................................. 221
R4-46-203. Procedures for Processing Applications ......................................................................... 221
R4-46-204. Appraiser Examinations .................................................................................................. 221
R4-46-205. Issuance of a License or Certificate ............................................................................... 221
R4-46-206. Hearing on Denial of a License or Certificate ................................................................. 222
R4-46-207. Renewal of a License or Certificate ................................................................................ 222
R4-46-209. Replacement License or Certificate ................................................................................ 222
Article 3 Hearings and Disciplinary Proceedings................................................................................... 222
R4-46-301. Complaints; Investigations; Informal Proceedings; Summary Suspensions; Refusal to
Appear ............................................................................................................................................... 222
R4-46-302. Formal Hearing Procedures............................................................................................ 225
R4-46-303. Rehearing or Review of the Board’s Decisions .............................................................. 225
R4-46-304. Conviction and Judgment Disclosure ............................................................................. 226
R4-46-305. Terms and Conditions of Reapplication After Revocation .............................................. 226
R4-46-306. Complaint Information Availability .................................................................................. 226
Article 4 Standards of Practice .............................................................................................................. 226
R4-46-401. Standards of Appraisal Practice ..................................................................................... 226
Article 5 Course Approval ...................................................................................................................... 227
R4-46-501. Course Approval ............................................................................................................. 227
R4-46-503. Hearing on Denial of Course Approval ........................................................................... 230
Article 6 Property Tax Agents ................................................................................................................ 230
R4-46-601. Standards of Practice ..................................................................................................... 230
R4-46-602. Disciplinary Proceedings; Board Action; Notice Requirements ...................................... 230
Article 7 General Provisions- Fees ........................................................................................................ 230
R4-46-704. Fee .................................................................................................................................. 230
Title 33, Chapter 7 LIENS ......................................................................................................................... 230
Article 10 Commercial Real Estate Broker Liens .................................................................................. 230
33-1071. Commercial real estate broker lien; definition .................................................................... 230
33-1072. Lien attachment; notice of commercial real estate broker lien; notice to owner ................ 231
33-1073. Contents of notice of lien; verification ................................................................................. 232
33-1074. Foreclosure; limitation of action; attorney fees ................................................................... 232
33-1075. Satisfaction of lien; damages.............................................................................................. 232
33-1076. Discharge of commercial real estate broker's liens; bond; limitations of actions; discharge of
surety; judgment ................................................................................................................................ 233
Title 33, Chapter 8 HOMESTEAD AND PERSONAL PROPERTY EXEMPTION .................................... 234
Article 1 Homesteads and Homestead Exemption ................................................................................ 234
33-1101. Homestead exemptions; persons entitled to hold homesteads .......................................... 234

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33-1102. Exemption by operation of law; designation of multiple properties on creditor’s request;
recording ............................................................................................................................................ 234
33-1103. Effective date of homestead exemption; extent of exemption; exceptions ........................ 234
33-1104. Abandonment of homestead; encumbrance of homestead ............................................... 235
33-1105. Sale by judgement creditor of property subject to homestead exemption ......................... 235
Article 2 Personal Property Exemption .................................................................................................. 235
33-1121. Definitions ........................................................................................................................... 235
33-1121.01. Availability of exemptions .............................................................................................. 236
33-1122. Debtor’s property not exempt from process ....................................................................... 236
33-1123. Household furniture, furnishings and appliances ............................................................... 236
33-1124. Food, fuel and provisions ................................................................................................... 236
33-1125. Personal items .................................................................................................................... 236
33-1126. Money benefits or proceeds; exception .............................................................................. 236
33-1127. School equipment ............................................................................................................... 238
33-1128. Fire fighting equipment ....................................................................................................... 238
33-1129. Public property or property of a public character................................................................ 238
33-1130. Tools and equipment used in a commercial activity, trade, business or profession .......... 238
33-1131. Definition; wages; salary; compensation ............................................................................ 238
33-1132. Waiver of exemption rights void ......................................................................................... 239
33-1133. Other exemption laws ......................................................................................................... 239
Article 3 Exemption From Execution of Foreign Judgement ................................................................. 239
33-1151. Exemption from execution .................................................................................................. 239
33-1152. Recording; effect ................................................................................................................ 239
33-1153. Abandonment of exemption; maintenance of residency .................................................... 239
Title 33, Chapter 9 CONDOMINIUMS ...................................................................................................... 239
Article 1 General Provisions .................................................................................................................. 239
33-1201. Applicability ......................................................................................................................... 239
33-1202. Definitions ........................................................................................................................... 239
33-1203. Variation.............................................................................................................................. 241
33-1204. Separate titles and taxation ................................................................................................ 241
33-1205. Applicability of local ordinances, rules and building codes ................................................ 241
33-1206. Eminent domain .................................................................................................................. 241
33-1207. Severability ......................................................................................................................... 242
Article 2 Creation, Alteration, and Termination of Condominiums ........................................................ 242
33-1211. Creation of condominium.................................................................................................... 242
33-1212. Unit boundaries .................................................................................................................. 242
33-1213. Construction and validity of declaration and bylaws........................................................... 243
33-1214. Description of units ............................................................................................................. 243
33-1215. Contents of declaration ....................................................................................................... 243

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33-1216. Leasehold condominiums ................................................................................................... 244
33-1217. Allocation of common element interests, votes and common expense liabilities ............... 244
33-1218. Limited common elements.................................................................................................. 245
33-1219. Plat ...................................................................................................................................... 245
33-1220. Exercise of development rights .......................................................................................... 245
33-1221. Alterations of units .............................................................................................................. 246
33-1222. Relocation of boundaries between adjoining units ............................................................. 246
33-1223. Subdivision of units ............................................................................................................. 247
33-1224. Easement for encroachments............................................................................................. 247
33-1225. Use for sale purposes ......................................................................................................... 247
33-1226. Easement to facilitate exercise of special declarant rights ................................................. 247
33-1227. Amendment of declaration.................................................................................................. 247
33-1228. Termination of condominium .............................................................................................. 248
33-1229. Rights of secured lenders ................................................................................................... 249
33-1230. Merger or consolidation of condominiums.......................................................................... 249
Article 3 Management of the Condominium .......................................................................................... 249
33-1241. Organization of unit owners' association ............................................................................ 249
33-1242. Powers of unit owners' association; notice to unit owner of violation ................................. 249
33-1243. Board of directors and officers; conflict; powers; limitations; removal; annual audit;
applicability ........................................................................................................................................ 251
33-1244. Transfer of special declarant rights .................................................................................... 253
33-1245. Termination of contracts and leases of declarant; applicability .......................................... 253
33-1246. Bylaws ................................................................................................................................ 253
33-1247. Upkeep of the condominium ............................................................................................... 254
33-1248. Open meetings; exceptions ................................................................................................ 254
33-1249. Quorums; applicability ........................................................................................................ 256
33-1250. Voting; proxies; absentee ballots; applicability; definition .................................................. 256
33-1251. Tort and contract liability..................................................................................................... 257
33-1252. Conveyance or encumbrance of common elements .......................................................... 257
33-1252.01. Conveyance of certain real property ............................................................................. 258
33-1253. Insurance ............................................................................................................................ 258
33-1254. Surplus monies ................................................................................................................... 259
33-1255. Assessments for common expenses; applicability ............................................................. 260
33-1256. Lien for assessments; priority; mechanics' and materialmen's liens; applicability ............. 260
33-1257. Other liens affecting the condominium ............................................................................... 261
33-1258. Association financial and other records; applicability ......................................................... 262
33-1259. Association as trustee ........................................................................................................ 262
33-1260. Resale of units; information required; fees; civil penalty; applicability; definition ............... 262
33-1260.01. Rental property; unit owner and agent information; fee; disclosure .............................. 264

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33-1261. Flag display; for sale, rent or lease signs; political signs and activities; applicability
(Amended by Laws 2014, Ch. 83) ..................................................................................................... 265
Article 4 Administration of the Condominium Act .................................................................................. 266
33-1270. Department of real estate; enforcement ............................................................................. 266
Title 33, Chapter 16 PLANNED COMMUNITIES ...................................................................................... 267
Article 1 General Provisions .................................................................................................................. 267
33-1801. Applicability; exemption ...................................................................................................... 267
33-1802. Definitions ........................................................................................................................... 267
33-1803. Assessment limitations; penalties; notice to member of violation ...................................... 267
33-1804. Open meetings; exceptions ................................................................................................ 268
33-1805. Association financial and other records .............................................................................. 270
33-1806. Resale of units; information required; fees; civil penalty; definition ................................... 270
33-1806.01. Rental property; member and agent information; fee; disclosure ................................. 272
33-1807. Lien for assessments; priority; mechanics’ and materialmen’s liens.................................. 273
33-1808. Flag display; political signs; caution signs; for sale, rent or lease signs; political activities 274
33-1810. Board of directors; annual audit.......................................................................................... 275
33-1811. Board of directors; contracts; conflict ................................................................................. 275
33-1812. Proxies; absentee ballots; definition ................................................................................... 276
33-1813. Removal of board member; special meeting ...................................................................... 276
33-1814. Slum property; professional management.......................................................................... 277
33-1815. Association authority; commercial signage ........................................................................ 277
33-1816. Solar energy devices; reasonable restrictions; fees and costs .......................................... 277
33-1817. Declaration amendment; design, architectural committees; review ................................... 278
33-1818. Community authority over public roadways; applicability ................................................... 279
Title 33, Chapter 18 HOMEOWNERS’ ASSOCIATION DWELLING ACTIONS ....................................... 279
Article 1 General Provisions .................................................................................................................. 279
33-2001. Definitions ........................................................................................................................... 279
33-2002. homeowners’ association dwelling actions; conditions ...................................................... 280
33-2003. Applicability ......................................................................................................................... 281
Title 10, Chapter 24 GENERAL PROVISIONS-NONPROFIT CORPORATIONS .................................... 281
Article 1 Short Title ................................................................................................................................ 281
10-3101. Short Title ........................................................................................................................... 281
10-3102. Reservation of power to amend or repeal .......................................................................... 281
Article 2 Filing Documents and Fees-Nonprofit Corporations ............................................................... 281
10-3120. Filing Requirements ............................................................................................................ 281
10-3121. Forms.................................................................................................................................. 282
10-3122. Filing, service and copying fees; public access fund; expedited report filing and access;
same day and next day services ....................................................................................................... 282
10-3123. Effective time and date of document .................................................................................. 284

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10-3124. Correcting filed document; articles of incorporation; application for authority to conduct
affairs ................................................................................................................................................. 284
10-3125. Filing duty of commission ................................................................................................... 284
10-3127. Evidentiary effect of copy of filed document ....................................................................... 285
10-3128. Certificate of good standing ................................................................................................ 285
Article 3 Arizona Corporation Commission............................................................................................ 285
10-3130. Powers ................................................................................................................................ 285
Article 4 Definitions, Notice, Private Foundations, Judicial Relief and Religious Organizations ........... 285
10-3140. Definitions ........................................................................................................................... 285
10-3141. Notice .................................................................................................................................. 288
10-3150. Private foundations; definition ............................................................................................ 289
10-3160. Judicial relief ....................................................................................................................... 289
10-3180. Religious corporations; constitutional protections .............................................................. 289
Title 10, Chapter 25 INCORPORATION-NONPROFIT CORPORATIONS .............................................. 290
Article 1 Incorporation............................................................................................................................ 290
10-3201. Incorporators....................................................................................................................... 290
10-3202. Articles of incorporation; violation; classification ................................................................ 290
10-3203. Incorporation ....................................................................................................................... 292
10-3204. Liability for noncorporate transactions ................................................................................ 292
10-3205. Organization of corporation ................................................................................................ 292
10-3206. Bylaws ................................................................................................................................ 292
10-3207. Emergency Bylaws ............................................................................................................. 292
Title 10, Chapter 26 PURPOSES AND POWERS-NONPROFIT CORPORATIONS ............................... 292
Article 1 General Provisions .................................................................................................................. 293
10-3301. Purposes............................................................................................................................. 293
10-3302. General powers .................................................................................................................. 293
10-3303. Emergency powers ............................................................................................................. 294
10-3304. Validity of actions ................................................................................................................ 294
Title 10, Chapter 27 NAME-NONPROFIT CORPORATIONS .................................................................. 294
Article 1 General Provisions .................................................................................................................. 294
10-3401. Corporate name .................................................................................................................. 295
10-3402. Reserved name .................................................................................................................. 295
10-3403. Registered name ................................................................................................................ 295
Title 10, Chapter 28 OFFICE AND AGENT-NONPROFIT CORPORATIONS ......................................... 296
Article 1 Place of Business and Agent .................................................................................................. 296
10-3501. Known place of business and statutory agent .................................................................... 296
10-3502. Change of known place of business and statutory agent ................................................... 296
10-3503. Resignation of statutory agent ............................................................................................ 296
10-3504. Service on corporation ........................................................................................................ 297

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Title 10, Chapter 29 MEMBERS AND MEMBERSHIP-NONPROFIT CORPORATIONS ........................ 297
Article 1 Admission of Members ............................................................................................................ 297
10-3601. Admission ........................................................................................................................... 297
10-3602. Consideration...................................................................................................................... 297
10-3603. No requirement of members ............................................................................................... 297
Article 2 Types of Memberships-Members’ Rights and Obligations...................................................... 297
10-3610. Difference in rights and obligations of members ................................................................ 297
10-3611. Transfers............................................................................................................................. 298
10-3612. Member’s liability to third parties ........................................................................................ 298
10-3613. Member’s liability for dues, assessments and fees ............................................................ 298
10-3614. Creditor’s action against member ....................................................................................... 298
Article. 3 Resignation and Termination ................................................................................................. 298
10-3620. Resignation ......................................................................................................................... 298
10-3621. Termination, expulsion and suspension ............................................................................. 298
10-3622. Purchase of memberships .................................................................................................. 299
Article 4 Derivative Suits ........................................................................................................................ 299
10-3630. Definitions ........................................................................................................................... 299
10-3631. Standing.............................................................................................................................. 299
10-3632. Demand .............................................................................................................................. 299
10-3633. Stay of proceedings ............................................................................................................ 300
10-3634. Dismissal ............................................................................................................................ 300
10-3635. Discontinuance or settlement ............................................................................................. 300
10-3636. Payment of expenses ......................................................................................................... 300
10-3637. Applicability to foreign corporations .................................................................................... 301
Article 5 Delegates ................................................................................................................................ 301
10-3640. Delegates............................................................................................................................ 301
Title 10, Chapter 30 MEMBERS' MEETINGS AND VOTING-NONPROFIT CORPORATIONS .............. 301
Article 1 Meetings and Action Without Meetings ................................................................................... 301
10-3701. Annual and regular meetings; exceptions .......................................................................... 301
10-3702. Special meeting .................................................................................................................. 301
10-3703. Court ordered meeting; costs; attorney fees ...................................................................... 302
10-3704. Action by written consent; definition ................................................................................... 302
10-3705. Notice of meeting ................................................................................................................ 303
10-3706. Waiver of notice .................................................................................................................. 303
10-3707. Record date; determining members entitled to notice and vote ......................................... 303
10-3708. Action by written ballot ........................................................................................................ 304
Article 2 Voting ...................................................................................................................................... 304
10-3720. Members’ list for meeting ................................................................................................... 304
10-3721. Voting entitlement generally ............................................................................................... 305
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10-3722. Quorum requirements ......................................................................................................... 305
10-3723. Voting requirements ........................................................................................................... 305
10-3724. Proxies ................................................................................................................................ 305
10-3725. Cumulative voting for directors ........................................................................................... 306
10-3726. Other methods of electing directors ................................................................................... 306
10-3727. Corporation’s acceptance of votes ..................................................................................... 306
Article 3 Voting Agreements of Trusts ................................................................................................... 307
10-3730. Voting trusts ........................................................................................................................ 307
10-3731. Voting agreements ............................................................................................................. 307
10-3732. Member agreements .......................................................................................................... 307
Title 10, Chapter 31 DIRECTORS AND OFFICERS-NONPROFIT CORPORATIONS ........................... 309
Article 1 Board of Directors.................................................................................................................... 309
10-3801. Requirement for and duties of board .................................................................................. 309
10-3802. Qualifications of directors ................................................................................................... 309
10-3803. Number of directors ............................................................................................................ 309
10-3804. Election, designation and appointment of directors ........................................................... 309
10-3805. Terms of directors generally ............................................................................................... 309
10-3806. Staggered terms for directors ............................................................................................. 310
10-3807. Resignation of directors ...................................................................................................... 310
10-3808. Removal of directors elected by members or directors ...................................................... 310
10-3809. Removal of designated or appointed directors ................................................................... 311
10-3810. Removal of directors by judicial proceeding ....................................................................... 311
10-3811. Vacancy on board ............................................................................................................... 311
10-3812. Compensation of directors .................................................................................................. 311
Article 2 Meetings and Action of the Board ........................................................................................... 311
10-3820. Regular and special meetings ............................................................................................ 312
10-3821. Action without meeting ....................................................................................................... 312
10-3822. Call and notice of meetings ................................................................................................ 312
10-3823. Waiver of notice .................................................................................................................. 312
10-3824. Quorum and voting ............................................................................................................. 312
10-3825. Committees of the board .................................................................................................... 313
Article 3 Standards of Conduct .............................................................................................................. 314
10-3830. General standards for directors .......................................................................................... 314
10-3833. Liability for unlawful distributions ........................................................................................ 314
Article 4 Officers .................................................................................................................................... 315
10-3840. Officers ............................................................................................................................... 315
10-3841. Duties and authority of officers ........................................................................................... 315
10-3842. Standards of conduct for officers ........................................................................................ 315
10-3843. Resignation and removal of officers ................................................................................... 316
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10-3844. Contract rights of officers.................................................................................................... 316
10-3845. Officers’ authority to execute documents ........................................................................... 316
Article 5 Indemnification ........................................................................................................................ 316
10-3850. Definitions ........................................................................................................................... 316
10-3851. Authority to indemnify ......................................................................................................... 317
10-3852. Mandatory indemnification.................................................................................................. 317
10-3853. Advance for expenses ........................................................................................................ 318
10-3854. Court ordered indemnification ............................................................................................ 318
10-3855. Determination and authorization of indemnification ........................................................... 318
10-3856. Indemnification of officers ................................................................................................... 319
10-3857. Insurance ............................................................................................................................ 319
10-3858. Application of article ........................................................................................................... 319
Article 6 Director’s Conflicting Interest Transactions ............................................................................. 319
10-3860. Definitions ........................................................................................................................... 319
10-3861. Judicial action ..................................................................................................................... 320
10-3862. Directors’ action; definition ................................................................................................. 321
10-3863. Members’ action; definition ................................................................................................. 321
10-3864. Conflict of interest policy; exceptions ................................................................................. 322
Title 10, Chapter 33 AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS-NONPROFIT
CORPORATIONS ..................................................................................................................................... 322
Article 1 Articles of Incorporation ........................................................................................................... 322
10-11001. Authority to amend ........................................................................................................... 322
10-11002. Amendment by board of directors .................................................................................... 323
10-11003. Amendment by board of directors and members ............................................................. 323
10-11004. Class voting by members on amendments ...................................................................... 324
10-11006. Articles of amendment ...................................................................................................... 324
10-11007. Restated articles of incorporation ..................................................................................... 324
10-11008. Amendment pursuant to reorganization ........................................................................... 325
10-11009. Effect of amendment and restatement ............................................................................. 325
Article 2 Bylaws ..................................................................................................................................... 325
10-11020. Amendment by board of directors .................................................................................... 325
10-11021. Amendment by board of directors or members ................................................................ 325
10-11022. Class voting by members on amendments ...................................................................... 326
10-11023. Bylaw increasing quorum or voting requirement for members ......................................... 326
10-11024. Bylaw increasing quorum or voting requirement for directors .......................................... 326
Article 3 Articles of Incorporation and Bylaws ....................................................................................... 326
10-11030. Approval by third persons ................................................................................................. 326
10-11031. Amendment terminating members or redeeming or canceling memberships .................. 326
Title 10, Chapter 34 MERGERS AND OTHER RESTRUCTURING TRANSACTIONS-NONPROFIT
CORPORATIONS ..................................................................................................................................... 326
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Article 1 General Provisions .................................................................................................................. 326
10-11101. Definitions ......................................................................................................................... 326
10-11102. Entity restructuring transactions ....................................................................................... 327
10-11103. Action on plan ................................................................................................................... 327
10-11105. Statement of merger or interest exchange; publication .................................................... 328
10-11108. Requests, devises and gifts.............................................................................................. 328
Title 10, Chapter 35 SALE OF ASSETS-NONPROFIT CORPORATIONS .............................................. 328
Article 1 General Provisions .................................................................................................................. 328
10-11201. Sale of assets in regular course of activities and mortgage of assets ............................. 328
10-11202. Sale of assets other than in regular course of activities ................................................... 328
Title 10, Chapter 35.1 HOSPITAL AND COMMUNITY HEALTH CENTER MERGERS AND OTHER
TRANSACTIONS ...................................................................................................................................... 330
Article 1 General Provisions .................................................................................................................. 330
10-11251. Definitions ......................................................................................................................... 330
10-11252. Scope; included transactions; excluded transactions ...................................................... 331
10-11253. Public hearing; notice; requirements; summary report ..................................................... 331
10-11254. Applicability ....................................................................................................................... 332
Title 10, Chapter 36 DISTRIBUTIONS-NONPROFIT CORPORATIONS ................................................. 332
Article 1 General Provisions .................................................................................................................. 332
10-11301. Prohibited distributions ..................................................................................................... 332
10-11302. Authorized distributions .................................................................................................... 332
Title 10, Chapter 37 DISSOLUTION-NONPROFIT CORPORATIONS .................................................... 333
Article 1 Voluntary Dissolution ............................................................................................................... 333
10-11401. Dissolution by incorporators or directors and third persons ............................................. 333
10-11402. Dissolution by directors and third persons ....................................................................... 333
10-11403. Articles of dissolution ........................................................................................................ 334
10-11404. Revocation of dissolution.................................................................................................. 334
10-11405. Effect of dissolution .......................................................................................................... 334
10-11406. Known claims against dissolved corporation.................................................................... 335
10-11407. Unknown claims against dissolved corporation................................................................ 335
Article 2 Administrative Dissolution ....................................................................................................... 336
10-11420. Grounds for administrative dissolution ............................................................................. 336
10-11421. Procedure for and effect of administrative dissolution ..................................................... 336
10-11422. Reinstatement following administrative dissolution .......................................................... 337
Article 3 Judicial Dissolution .................................................................................................................. 337
10-11430. Grounds for judicial dissolution......................................................................................... 337
10-11431. Procedure for judicial dissolution ...................................................................................... 338
10-11432. Receivership ..................................................................................................................... 338
10-11433. Decree of dissolution ........................................................................................................ 338

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Article 4 Miscellaneous .......................................................................................................................... 338
10-11440. Deposit with department of revenue ................................................................................. 338
Title 10, Chapter 38 FOREIGN CORPORATIONS-NONPROFIT CORPORATIONS .............................. 339
Article 1 Grant of Authority .................................................................................................................... 339
10-11501. Authority to conduct affairs required ................................................................................. 339
10-11502. Consequences for conducting affairs without authority.................................................... 339
10-11503. Application for certificate of authority ............................................................................... 340
10-11504. Delivery of changes; changes requiring amendment to application for authority............. 340
10-11505. Effect of grant of authority ................................................................................................ 341
10-11506. Corporate name of foreign corporation ............................................................................ 341
10-11507. Known place of business and statutory agent of foreign corporation .............................. 342
10-11508. Change of known place of business or statutory agent of foreign corporation ................ 342
10-11509. Resignation of statutory agent of foreign corporation ...................................................... 342
10-11510. Service on foreign corporation ......................................................................................... 343
Article 2 Withdrawal ............................................................................................................................... 343
10-11520. Withdrawal of foreign corporation ..................................................................................... 343
10-11521. Withdrawal by directors or members; foreign corporations .............................................. 344
Article 3 Revocation of Certificate of Authority ...................................................................................... 344
10-11530. Grounds for revocation ..................................................................................................... 344
10-11531. Procedure for and effect of revocation; reinstatement ..................................................... 345
Title 10, Chapter 39 RECORDS AND REPORTS-NONPROFIT CORPORATIONS ............................... 346
Article 1 Records ................................................................................................................................... 346
10-11601. Corporate records ............................................................................................................. 346
10-11602. Inspection of records by members; applicability............................................................... 346
10-11603. Scope of inspection rights; charge ................................................................................... 347
10-11604. Court ordered inspection .................................................................................................. 347
10-11605. Limitations on use of membership list; applicability ......................................................... 348
Article 2 Reports .................................................................................................................................... 348
10-11620. Financial statements for members ................................................................................... 348
10-11621. Report of indemnification to members .............................................................................. 348
10-11622. Annual report .................................................................................................................... 348
10-11623. Statement of bankruptcy or receivership; interrogatories before subsequent incorporation;
violation; classification; definition ....................................................................................................... 349
Article 3 Miscellaneous Provisions ........................................................................................................ 350
10-11630. Certificate of good standing; license and registration renewal ......................................... 350
10-11631. Civil liability for false statements ...................................................................................... 350
10-11632. Interrogatory or signature violations; corporate records; classification ............................ 350
10-11633. Interrogatories by the commission ................................................................................... 350
10-11634. information disclosed by interrogatories ........................................................................... 351

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10-11635. Certified copies received in evidence ............................................................................... 351
10-11636. Civil liability for false or misleading filings; exceptions ..................................................... 351
Title 10, Chapter 40 TRANSITION PROVISIONS-NONPROFIT CORPORATIONS ............................... 351
Article 1 General Provisions .................................................................................................................. 351
10-11701. Application to existing domestic corporations .................................................................. 351
10-11702. Application to qualified foreign corporations..................................................................... 352

This Real Estate Law Book is intended for use solely as a desk reference tool and should not be used as
a substitute for the Arizona Revised Statutes.

Arizona Real Estate Laws
CONSTITUTION OF THE STATE OF ARIZONA
Article 26. RIGHT OF LICENSED REAL ESTATE BROKERS AND SALESMAEN TO
PREPARE INSTRUMENTS INCIDENT TO PROPERTY TRANSACTIONS
§ 1. Powers of real estate broker or salesman
Section 1. Any person holding a valid license as a real estate broker or a real estate salesman regularly
issued by the Arizona State Real Estate Department when acting in such capacity as broker or salesman
for the parties, or agent for one of the parties to a sale, exchange, or trade, or the renting and leasing of
property, shall have the right to draft or fill out and complete, without charge, any and all instruments
incident thereto including, but not limited to, preliminary purchase agreements and earnest money
receipts, deeds, mortgages, leases, assignments, releases, contracts for sale of realty, and bills of sale.

Title 32, Chapter 20 REAL ESTATE
Article 1 Real Estate Department
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. "Advertising" means the attempt 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 for the publication or use of 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.
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(viii) Offering statements.
3. "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.
4. "Associate broker" means a licensed broker employed by another broker. Unless otherwise
specifically provided, an associate broker has the same license privileges as a salesperson.
5. "Barrier" means a natural or man-made geographical 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.
6. "Blanket encumbrance" means any mortgage, any deed of trust or any other encumbrance or
lien securing or evidencing the payment of money and affecting more than one lot or parcel of
subdivided land, or an agreement affecting more than one lot or parcel by which the subdivider
holds the subdivision under an option, contract to sell or trust agreement. Blanket encumbrance
does not include taxes and assessments levied by public authority.
7. "Board" means the state real estate advisory board.
8. "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.
9. "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.
10. "Camping site" means a space designed and promoted for the purpose of locating any trailer,
tent, tent trailer, pickup camper or other similar device used for camping.
11. "Cemetery" or "cemetery property" means any one, or a combination of more than one, of the
following in a place 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.
12. "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.
13. "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.
14. "Commissioner" means the state real estate commissioner.
15. "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.
16. "Compensation" means any fee, commission, salary, money or other valuable consideration
for services rendered or to be rendered as well as the promise of consideration whether
contingent or not.
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17. "Contiguous" means lots, parcels or fractional interests that share a common boundary or
point. Lots, parcels or fractional interests are not contiguous if they are separated by either of the
following:
(a) A barrier.
(b) 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.
18. "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.
19. "Corporation licensee" means a lawfully organized corporation that is registered with the
Arizona corporation commission and that has an officer licensed as the designated broker
pursuant to section 32-2125.
20. "Department" means the state real estate department.
21. "Designated broker" means the 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.
22. "Developer" 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. Developer does not include a person whose involvement with a development
is limited to the listing of property within the development for sale, lease or use.
23. "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.
24. "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.
25. "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.
26. "Improved lot or parcel" means a lot or parcel of a subdivision upon which lot or parcel 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 complete construction of a residential, commercial or industrial
building on the lot or parcel within two years from the date on which the contract of sale for the lot
is entered into.
27. "Inactive license" means a license 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.
28. "Lease" or "leasing" includes any lease, whether it is the sole, the principal or any incidental
part of a transaction.
29. "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.
30. "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.
31. "Licensee" means a person to whom a license for the current license period has been granted
under any provision of this chapter, and, for purposes of section 32-2153, subsection A, shall
include original license applicants.
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32. "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.
33. "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.
34. "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 improvement or development of real property or is governed or administered
by a master owner's association.
35. "Member" means a member of the real estate advisory board.
36. "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 the procuring of 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.
37. "Membership camping contract" means an agreement 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.
38. "Membership camping operator" 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. Membership
camping operator 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.
39. "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.
40. "Partnership licensee" means a partnership with a managing general partner who is licensed
as the designated broker pursuant to section 32-2125.
41. "Permanent access", as required under article 4 of this chapter, means permanent access
from the subdivision to any federal, state or county highway.
42. "Perpetual or endowed-care cemetery" means a cemetery wherein lots or other burial spaces
are sold or transferred under the representation that the cemetery will receive "perpetual" or
"endowed" care as defined in this section free of further cost to the purchaser after payment of
the original purchase price for the lot, burial space or interment right.
43. "Perpetual-care" or "endowed-care" means the maintenance and care of all places where
interments have been made of the trees, shrubs, roads, streets and other improvements and
embellishments contained within or forming a part of the cemetery. This shall not include the
maintenance or repair of monuments, tombs, copings or other man-made ornaments as
associated with individual burial spaces.
44. "Person" means any individual, corporation, partnership or company and any other form of
multiple organization for carrying on business, foreign or domestic.
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45. "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.
46. "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.
47. "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.
48. "Real estate broker" means a person, other than a salesperson, who, for another and for
compensation:
(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.
(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 the procuring of prospects, 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 the negotiation of 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 upon or transfer of real estate, businesses and business
opportunities or timeshare interests subject to section 32-2155, subsection C. 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 upon, lands owned by the state or
federal government.
(m) Claims, demands, charges, receives, collects or contracts for the collection of 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 advertisement or by any other offering to sell, lease, exchange or
rent real property or selling kits connected therewith. This shall not include the activities
of any communications media of general circulation or coverage not primarily engaged in

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the advertisement of 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.
49. "Real estate sales contract" means an agreement in which one party agrees to convey title to
real estate to another party upon the satisfaction of specified conditions set forth in the contract.
50. "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.
51. "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 the offering of the
property as a prize or gift if a monetary charge or consideration for whatever purpose is required.
52. "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.
53. "School" means a person or entity that offers a course of study towards completion of the
education requirements leading to licensure or renewal of licensure under this chapter.
54. "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.
55. "Subdivider" 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, but does not include a public
agency or officer authorized by law to create subdivisions.
56. "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.
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(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, upon investigation by the commissioner, there is
evidence of intent to subdivide.
57. "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.
58. "Trustee" means:
(a) A person designated under section 32-2194.27 to act as a trustee for an endowmentcare cemetery fund.
(b) A person holding bare legal title to real property under a subdivision trust. A trustee
shall not be deemed to be a developer, subdivider, broker or salesperson within this
chapter.
59. "Unimproved lot or parcel" means a lot or parcel of a subdivision that is not an improved lot or
parcel.
60. "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 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.
32-2102. Administration of chapter by real estate department; purpose
This chapter shall be administered by the state real estate department under the direction of the real
estate commissioner. The purpose of the department in administering this chapter is to protect the public
interest through licensure and regulation of the real estate profession in this state.
32-2103. Placement of monies collected; revision of fees
A. The department shall deposit, pursuant to sections 35-146 and 35-147, all monies collected under the
provisions of this chapter in the state general fund unless otherwise prescribed by law.
B. Each year the commissioner shall revise all fees collected under this chapter within the limits
prescribed by this chapter in such a manner that the revenue derived from such fees equals at least
ninety-five per cent but not more than one hundred ten per cent of the anticipated appropriated budget for
the department for the succeeding fiscal year. If the revenue derived from the fees exceeds one hundred
ten per cent of the anticipated appropriated budget for the department for the succeeding fiscal year, the
commissioner shall lower the fees in the succeeding year in proportion to the excess.
32-2104. Real estate advisory board; members; terms; qualifications; compensation; chairman;
duties
(Amended by Laws 2014, Ch. 74)
A. The real estate advisory board is established composed of ten members who are appointed by the
governor. The term of office of each member is six years, and the terms of three members expire on
January 31 of each odd numbered year. Appointment to fill a vacancy occurring other than by expiration
of term shall be filled by appointment for the unexpired portion of the term only.
B. The membership of the board shall consist of:
1. Two members, each of whom is a real estate broker with at least five years of brokerage
experience in this state. Not more than one member shall be appointed from any one county.
2. Three members, two of whom have been engaged in residential real estate brokerage for the
five years immediately preceding appointment, and one of whom has been engaged in multifamily
residential rental property management with a real estate broker license for the five years
immediately preceding appointment.
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3. Two members who are primarily engaged in subdividing real property.
4. Three public members who are not related within the third degree of consanguinity or affinity to
any person holding a broker's or salesperson's license from this state.
C. Members of the board shall receive no compensation but shall be reimbursed for subsistence
expenses pursuant to section 38-624 and travel expenses pursuant to section 38-623.
D. The board annually shall select from its membership a chairperson for the board.
E. The board shall provide the commissioner with such recommendations as it deems necessary and
beneficial to the best interests of the public. The board shall also provide recommendations on specific
questions or proposals as the board deems necessary or as requested by the commissioner.
F. The board annually shall present to the governor an evaluation of the performance of the real estate
commissioner and the real estate department.
G. Not more than five members of the board from any one county may serve concurrently.
32-2105. Meetings of the state real estate advisory board
A. The board shall meet for the transaction of business not less than once each quarter-year at a place
within the state it designates. The board may hold other meetings it deems advisable upon five days'
written notice of the time and place of the meeting, signed by the commissioner or a majority of the
members of the board.
B. A majority of the board shall constitute a quorum. A vacancy on the board shall not impair the rights or
powers of the remaining members.
32-2106. Real estate commissioner; appointment; qualifications
A. The real estate commissioner shall be appointed by the governor, pursuant to section 38-211. The real
estate commissioner shall serve at the pleasure of the governor.
B. To be a candidate for the position of real estate commissioner a person shall have at least five years'
experience in the real estate industry, title insurance industry, banking or mortgage broker industry and
three years' administrative experience and shall not at the date of acceptance of appointment be
financially interested in any real estate or brokerage firm, nor act as a broker, and salesman or agent
therefor except through a trust over which the applicant has no control.
32-2107. Powers and duties of commissioner; compensation; administration of department; seal;
revolving fund
A. The commissioner shall have charge of the department with power to administer it in accordance with
the provisions of and to carry out the purposes of this chapter. The commissioner shall adopt a seal
which shall bear the words "real estate commissioner, state of Arizona", which shall be used for the
authentication of proceedings of the department and the official documents thereof. The commissioner's
principal office shall be at the state capitol. The commissioner may have branch offices the commissioner
deems necessary in other cities.
B. The commissioner shall receive compensation as determined pursuant to section 38-611.
C. The commissioner shall prepare and cause to be produced and circulated among the licensees and
the general public educational matter the commissioner deems helpful and proper for the guidance and
assistance of both licensees and the public. The commissioner may assess a fee for each of these
educational products that does not exceed a level reasonably estimated to be sufficient to recover
production and distribution costs.
D. In cooperation with industry educators, content experts and other professionals, the commissioner may
develop, sponsor or hold educational seminars and workshops for the benefit of licensees.
E. A real estate department education revolving fund is established consisting of monies received from
the sale of educational matter under subsection C of this section and grants of monies to be used in the
production of educational products. Monies in the fund shall be used for the printing of a compilation of
real estate laws and rules and other educational publications and for other educational efforts the
commissioner deems helpful and proper for the guidance and assistance of licensees and the public,
including sponsoring and holding educational seminars or workshops for educators and other licensees.
The department shall establish the revolving fund as a separate account. The department shall make a
full accounting of its use to the department of administration annually or as required by the department of
administration. Expenditures from the fund and reimbursement to the fund shall be as prescribed by rules
of the department of administration. Monies received in the real estate department education revolving
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fund are not subject to reversion, except that all monies in the fund in excess of twenty-five thousand
dollars at the end of the fiscal year revert to the state general fund.
F. The commissioner shall adopt rules, in accord with this chapter, as the commissioner deems
necessary to carry out this chapter.
G. The commissioner may approve standardized legal forms for use in the sale or lease of real estate for
the purpose of recognizing compliance of the forms with this chapter and the rules adopted pursuant to
this chapter.
32-2107.01. Recorded disclaimer of unlawful restrictions
A. The commissioner shall execute and record in the office of the county recorder in each county in this
state a document that disclaims the validity and enforceability of certain restrictions and covenants. The
document shall contain a disclaimer in substantially the following form:
It is the law of this state that any covenants or restrictions that are based on race, religion, color, disability
status or national origin are invalid and unenforceable. If the invalid covenant or restriction is contained in
a document that is recorded in this county, it is hereby declared void.
B. The document that is executed and recorded by the commissioner shall include the legal description
specified by title 11, chapter 1, article 1 for the appropriate county.
C. This section does not affect any other covenant, condition or restriction.
32-2108. Powers and duties of commissioner to make investigations and require information
A. The commissioner on the commissioner’s own motion may, and upon a verified complaint in writing
shall, investigate the actions of any natural person or entity engaged in the business or acting in the
capacity of a broker, salesperson or developer and may at any time examine the books and records used
in connection with the business insofar as the commissioner reasonably believes the books or records
pertain to the transfer, sale, rental, lease, use or management of real property. In connection with an
investigation, the commissioner or the commissioner's representative may take testimony and may
examine and copy documents and other physical evidence that relate to the investigation. If necessary,
the commissioner or the commissioner's representative may issue subpoenas to compel the testimony of
witnesses and the production of documents and other evidence. If a person refuses to comply with a
subpoena, the commissioner or the commissioner’s representative may apply to the superior court for an
order to compel compliance.
B. The commissioner shall establish a certification and enforcement unit that is charged with investigative
duties relevant to the rules of the commissioner and the laws of this state, including applications for
certification, investigations and enforcement and other duties as the commissioner prescribes.
C. The commissioner may require any additional information and documents that are reasonably
necessary to determine the good moral character of an applicant for or holder of a license or public report
or renewal or amendment of a license or public report. For the purposes of this subsection, "applicant" or
"holder" means a person and, if an entity, any officer, director, member, manager, partner, owner, trust
beneficiary holding ten per cent or more beneficial interest, stockholder owning ten per cent or more stock
and person exercising control of the entity. The information may include:
1. Prior criminal records.
2. A valid fingerprint clearance card issued pursuant to section 41-1758.03.
3. An affidavit setting out whether the applicant or holder has:
(a) Been convicted of a felony or a misdemeanor.
(b) Had any business or professional license denied, suspended or revoked or had any
other disciplinary action taken or administrative order entered against the applicant or
holder by any regulatory agency.
(c) Had a public report denied or suspended.
(d) Been permanently or temporarily enjoined by order, judgment or decree from
engaging in or continuing any conduct or practice in connection with the sale or purchase
of real estate, cemetery property, time-share intervals, membership camping
campgrounds or contracts or securities or involving consumer fraud or the racketeering
laws of this state.
(e) Had any adverse decision or judgment entered against the applicant or holder arising
out of the conduct of any business in or involving a transaction in real estate, cemetery

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property, time-share intervals or membership camping campgrounds or contracts
involving fraud, dishonesty or moral turpitude.
(f) Filed, or is subject to, a petition under any chapter of the federal bankruptcy act.
(g) Participated in, operated or held an interest or exercised control in any entity to which
subdivision (b), (c), (d), (e) or (f) applies.

32-2108.01. License applicants; fingerprint clearance cards; definition
A. Before receiving and holding a license issued pursuant to this chapter, each license applicant shall
obtain a valid fingerprint clearance card issued pursuant to section 41-1758.03.
B. The license applicant is responsible for providing the department with a valid fingerprint clearance
card.
C. The department shall not issue a license to an original license applicant before receiving a valid
fingerprint clearance card pursuant to this section. However, 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 valid fingerprint clearance card within ten days after being notified by the department.
D. This section does not affect the department's authority to otherwise issue, deny, cancel, terminate,
suspend or revoke a license.
E. For the purposes of this section, "license applicant" means:
1. Each original real estate, cemetery and membership camping salesperson and broker
applicant pursuant to article 2 of this chapter.
2. Each natural person, or for an entity applicant, any person exercising control of the entity, who
applies for an original certificate of approval to operate a real estate school, or for a renewal
certificate, any natural person or person exercising control who has not previously submitted a
fingerprint card to the department.
3. Any natural person, or for an entity applicant, any person exercising control of the entity, on
whom the department has evidence of a criminal record that has not been previously reviewed or
evaluated by the department and who applies for a:
(a) License renewal pursuant to section 32-2130.
(b) Public report to:
(i) Sell or lease subdivided lands pursuant to article 4 of this chapter.
(ii) Sell or lease unsubdivided lands pursuant to article 7 of this chapter.
(iii) Sell or lease time-share estates pursuant to article 9 of this chapter.
(iv) Sell membership camping contracts pursuant to article 10 of this chapter.
(c) Certificate of authority to sell cemetery lots pursuant to article 6 of this chapter.
32-2109. Employment; compensation
Subject to title 41, chapter 4, article 4, the commissioner shall appoint a secretary and such deputies,
assistants, and clerks as are necessary. The compensation of all such employees shall be as determined
pursuant to section 38-611.
32-2110. Interest of department officer or employee in real estate company prohibited
No officer or employee of the department shall be connected with or directly or indirectly interested in any
real estate company or real estate brokerage firm.
32-2111. Attorney general as legal adviser and representative of commissioner
The attorney general shall act for the commissioner in all legal actions or proceedings and shall advise
him upon all questions of law arising out of the administration of this chapter.
32-2112. Admissibility of certified copies of department records in evidence
Properly certified copies of records of the department or documents filed therein shall be received in
evidence in all courts of the state equally and with like effect as the originals.
32-2113. Recorded disclosure for territory in the vicinity of a military airport or ancillary military
facility

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A. The commissioner shall execute and record in the office of the county recorder in each county in this
state that includes territory in the vicinity of a military airport or ancillary military facility as defined in
section 28-8461 a document, applicable to property located within territory in the vicinity of a military
airport or ancillary military facility, with the following disclosure: "This property is located within territory in
the vicinity of a military airport or ancillary military facility and may be subject to increased noise and
accident potential."
B. The attorney general shall prepare in recordable form the document that is executed and recorded by
the commissioner pursuant to this section.
C. The document that is executed and recorded by the commissioner shall include a legal description of
the territory in the vicinity of a military airport or ancillary military facility. The military airport shall cause
the legal description of territory in the vicinity of the military airport or ancillary military facility defined in
section 28-8461 to be prepared and shall provide the legal description to the commissioner and the state
land department in recordable form in twelve point font on eight and one-half inch by eleven inch paper.
D. The state land department shall prepare maps with the legal descriptions pursuant to section 37-102.
32-2114. Recorded disclosure for land under a military training route or restricted air space
A. The commissioner shall execute and record in the office of the county recorder in each county in this
state that includes land under a military training route as defined in section 28-8461 and as delineated in
the military training route map prepared by the state land department pursuant to section 37-102 a
document, applicable to land under a military training route as delineated in the military training route
map, disclosing that the land is under a military training route.
B. The commissioner shall execute and record in the office of the county recorder in each county in this
state that includes land under restricted air space as delineated in the restricted air space map prepared
by the state land department pursuant to section 37-102 a document, applicable to land under restricted
air space as delineated in the restricted air space map, disclosing that the land is under restricted air
space.
C. If a military training route changes and people who were notified pursuant to subsection A of this
section no longer have property under a military training route as delineated in the military training route
map, the commissioner shall execute and record in the office of the county recorder in the county in which
the property is located a document disclosing that the land is not under a military training route.
D. If restricted air space changes and people who were notified pursuant to subsection B of this section
no longer have property under restricted air space as delineated in the restricted air space map, the
commissioner shall execute and record in the office of the county recorder in the county in which the
property is located a document disclosing that the land is not under restricted air space.
E. The attorney general shall prepare in recordable form the documents that are executed and recorded
by the commissioner pursuant to this section.
F. The documents that are executed and recorded by the commissioner pursuant to this section shall
include a legal description of the military training route as delineated in the military training route map and
a legal description of the restricted air space as delineated in the restricted air space map.
32-2114.01. Military electronics range
A. The commissioner shall execute and record in the office of the county recorder in each county in this
state that includes a military electronics range as delineated in the military electronics range map
prepared by the state land department pursuant to section 37-102 a document that applies to land
contained in a military electronics range and that discloses that the land is contained in a military
electronics range.
B. If a military electronics range changes and persons who were notified pursuant to subsection A of this
section no longer have property contained in a military electronics range as delineated in the military
electronics range map, the commissioner shall execute and record in the office of the county recorder in
the county in which the property is located a document disclosing that the land is not contained in a
military electronics range.
C. The attorney general shall prepare in recordable form the documents that are executed and recorded
by the commissioner pursuant to this section.
D. The documents that are executed and recorded by the commissioner pursuant to this section shall
include a geospatial description of the military electronics range as delineated in the military electronics
range map.
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32-2115. Department's website; military training route map; restricted air space map; military
electronics range map
The department shall post on its website the following maps prepared by the state land department as
prescribed by law:
1. The military training route map.
2. The restricted air space map.
3. The military electronics range of a military installation.
32-2116. Military training routes; contacts
A. Each year the department shall contact the chairperson of the Arizona military airspace working group
and request the name, address and telephone number of the chairperson.
B. The department shall post the information it receives pursuant to subsection A on the department's
web site.
32-2117. Earth fissure maps; posting; immunity
A. On receipt of maps from the Arizona geological survey, the state real estate department shall provide
any earth fissure map to any member of the public in printed or electronic format on request and provide
access on its website to the earth fissure maps prepared by the Arizona geological survey pursuant to
section 27-106, subsection A, paragraph 3. The following notice shall be displayed below each map:
Notice
“The state of Arizona has made a reasonable effort to ensure the accuracy of this map when it was
produced, but errors may be present and the state of Arizona does not guarantee its accuracy. The map
supplements, and is not a substitute for, a professional inspection of property for defects and conditions.”
B. This section does not deny a person rights guaranteed by the Arizona Constitution, and
notwithstanding any other law, a subdivider, owner or licensee is not liable to any person or governmental
entity for any act or failure to act in connection with:
1. The disclosure of real estate subject to earth fissures if the subdivider, owner or licensee
provides a written disclosure or includes notice in a public report, issued pursuant to section 322183 or 32-2195.03, with respect to real estate subject to earth fissures, of the map and website
described in subsection A of this section. The written disclosure or notice in a public report,
issued pursuant to section 32-2183 or 32-2195.03, of the map and website does not create an
independent cause of action.
2. Any disclosure that occurred before the date the map described in subsection A of this section
is posted on the website if the subdivider, owner or licensee had no actual knowledge that the
land was subject to earth fissures before the map was posted.
32-2118. Competition with private enterprise; prohibition
The department shall not create, endorse or sponsor any activity that may be legally performed by a
licensee in any way that constitutes competition with the private sector, unless there is no licensee that is
capable and willing to create, endorse or sponsor the activity. This section does not apply to license
approval processes or procedures under this chapter or to educational activities under section 32-2107.
32-2119. Consumer education; water supply definitions; map
A. The department of real estate shall post on its website information advising prospective home buyers
to investigate water availability before purchasing real property and shall include a link to the website of
the department of water resources for definitions of the following terms that apply in areas of the state
outside active management areas, as required by section 45-108.05:
1. Adequate water supply.
2. Inadequate water supply.
3. Property served by a water provider currently designated as having an adequate water supply.
4. No water supply determination.
B. The department of real estate shall display on its website a current map of all areas in this state that
are outside active management areas established pursuant to title 45, chapter 2, article 2.

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Article 2 Licensing
32-2121. Applicability of article; exemption
A. The provisions of this article do 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 or other
consideration including 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 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 in the performance of the attorney's duties as an attorney. Nothing in this
paragraph shall be construed to 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
no more than one location during the period of the 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 no more frequently than monthly
and that does not exceed one-half of the 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 purposes of this paragraph "residential leasing agents or onsite managers" means natural persons employed by the owner or the owner's licensed
management agent 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 the conduct of 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 in the employ of an employing broker, of a person otherwise licensed
under this chapter or of 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 in the employ of an employing broker and who perform
telemarketing services that are limited to soliciting interest in engaging the services of a licensee
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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 upon 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 money, or
both, for occupancies of thirty-one or fewer days in a dwelling unit in a common interest
development.
16. An escrow agent in the performance of the escrow agent's duties as an escrow agent, a title
Insurer in the performance of the title insurer's duties as a title insurer or a title insurance agent in
the performance of the title insurance agent's duties as a title insurance agent. Nothing in this
paragraph shall be construed to 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.
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.
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5. Membership camping broker.
6. Membership camping salesperson.
B. It shall be unlawful for any person, corporation, partnership or limited liability company to engage in
any business, occupation or activity listed in subsection A without first obtaining a license as prescribed in
this chapter and otherwise complying with the provisions of this chapter.
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 the performance of any acts included in the
definition of a broker unless otherwise provided in this chapter.
D. Any act, in consideration or expectation of compensation, which is included in the definition of a real
estate, cemetery 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.
32-2123. Application for license as broker or salesperson
A. Every application for an original license shall be either submitted in writing and signed by the applicant
or submitted electronically and contain an electronic or digital identifier that the commissioner deems
appropriate. The application shall be accompanied by all applicable fees.
B. An application for an original license as a broker or salesperson shall set forth:
1. The legal name and residence address of the applicant.
2. The applicant's employers and employment history for the immediately preceding ten years
and any experience in real estate sales, appraisals, transfers or similar business in which the
applicant previously engaged, if the commissioner determines that this information is needed to
reasonably evaluate the good moral character of the applicant.
3. The name and place of business of the applicant's present employer, if any.
4. Whether the applicant has ever been convicted of a felony and, if so, the nature of the felony,
where and when committed and the disposition of the conviction, or whether the applicant has
been disbarred or suspended from the practice of law.
5. Whether the applicant has ever been refused a broker's or salesperson's license or any other
occupational license in this or any other state, whether the applicant's license as a broker or
salesperson has been revoked or suspended in this or any other state or whether the applicant
has had any other occupational or professional license, certificate or registration revoked or
suspended in this or any other state.
6. The name of any corporation, company or partnership that is or ever has been licensed by the
department in which the applicant exercised any control.
7. If the applicant is a natural person, the applicant's social security number. If the applicant, due
to bona fide religious convictions or other bona fide reasons that the applicant documents on the
application to the satisfaction of the commissioner, does not have a social security number, the
applicant may provide the applicant's federal tax identification number with the application. The
state real estate department shall use the applicant's social security number or federal tax
identification number to aid the department of economic security in locating noncustodial parents
or the assets of noncustodial parents, and for no other purpose.
C. An application for a license as a broker additionally shall set forth:
1. The name under which the business is to be conducted.
2. The situs and mailing address of the applicant's place of business, or if more than one, the
situs and mailing addresses of each.
D. An applicant for a broker's or salesperson's license shall provide information that the commissioner
determines is reasonably necessary to establish the character of the applicant. The information may
include but shall not be limited to:
1. Prior criminal records.
2. A valid fingerprint clearance card issued pursuant to section 41-1758.03.
3. An affidavit setting out whether the applicant has participated in, operated or held an interest in
any land development company which has filed, or is subject to, a petition under any chapter of
the federal bankruptcy act.

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E. Each person licensed pursuant to this article, whether the license is active or inactive, shall have
available for the licensee's use a current copy of the department's statutes, rules and annotations
pertaining to real estate laws. Failure to comply with this requirement shall not be deemed grounds for a
civil penalty or for denial, suspension or revocation of a license.
32-2124. Qualifications of licensees
A. Except as otherwise provided in this chapter, the commissioner shall require proof, through the
application or otherwise, as the commissioner deems advisable with due regard to the interests of the
public, as to the honesty, truthfulness, good character and competency of the applicant and shall require
that the applicant has:
1. If for an original real estate broker's license, at least three years' actual experience as a
licensed real estate salesperson or real estate broker during the five years immediately preceding
the time of application.
2. If for an original cemetery broker's license, either a current real estate broker's license, or if the
applicant does not have a current real estate broker's license, at least three years' actual
experience as a cemetery salesperson or broker or as a licensed real estate salesperson or
broker during the five years immediately preceding the time of application.
3. If for an original membership camping broker's license, either a current real estate broker's
license, or if the applicant does not have a current real estate broker's license, at least three
years' actual experience as a licensed membership camping salesperson or broker or as a
licensed real estate salesperson or broker during the five years immediately preceding the time of
application.
4. If for any type of broker's or salesperson's license, not had a license denied within one year
immediately preceding application in this state pursuant to section 32-2153 or a similar statute in
any other state.
5. If for any type of broker's or salesperson's license, not had a license revoked within the two
years immediately preceding application in this state pursuant to section 32-2153 or a similar
statute in any other state.
6. If reapplying for a license that expired more than one year before the date of application, met
all current education and experience requirements and retakes the examination the same as if
the applicant were applying for the license for the first time.
7. If for a real estate, cemetery or membership camping broker's license, other than a renewal
application, an equivalent amount of active experience within the immediately preceding five
years in the field in which the applicant is applying for the broker's license, as a substitute for the
licensed active experience otherwise required in paragraphs 1, 2 and 3 of this subsection. The
licensed active experience required may be met if the applicant can demonstrate to the
commissioner's satisfaction that the applicant has an equivalent amount of experience in the past
five years that, if the applicant had held a license, would have been sufficient to fulfill the licensed
experience requirement.
B. All applicants other than renewal applicants under section 32-2130 for a real estate salesperson's
license shall show evidence satisfactory to the commissioner that they have completed a real estate
salesperson's course, prescribed and approved by the commissioner, of at least ninety classroom hours,
or its equivalent, of instruction in a real estate school certified by the commissioner and have satisfactorily
passed an examination on the course. In no case shall the real estate salesperson's course completion or
its equivalent be more than ten years before the date of application unless, at the time of application, the
commissioner determines in the commissioner's discretion that the applicant has work experience in a
real estate related field and education that together are equivalent to the prelicensure education
requirement. The commissioner may waive all or a portion of the prelicensure course requirement, other
than the twenty-seven hour Arizona specific course, for an applicant who holds a current real estate
license in another state.
C. All applicants other than renewal applicants under section 32-2130 for a real estate broker's license
shall show evidence satisfactory to the commissioner that they have completed a real estate broker's
course, prescribed and approved by the commissioner, of at least ninety classroom hours, or the
equivalent, of instruction in a real estate school certified by the commissioner and have satisfactorily
passed an examination on the course. In no case shall the real estate broker's course completion or its
equivalent be more than ten years before the date of application unless, at the time of application, the
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commissioner determines in the commissioner's discretion that the applicant has work experience in a
real estate related field and education that together are equivalent to the prelicensure education
requirement. The commissioner may waive all or a portion of the prelicensure course requirement, other
than the twenty-seven hour Arizona specific course, for an applicant who holds a current real estate
license in another state.
D. Prior to receiving any license provided for by this chapter, an applicant shall be at least eighteen years
of age.
E. The commissioner shall ascertain by written, electronic or any other examination method that an
applicant for a real estate license has:
1. An appropriate knowledge of the English language, including reading, writing and spelling, and
of arithmetical computations common to real estate practices.
2. At a minimum, an understanding of the general purpose and legal effect of any real estate
practices, principles and related forms, including agency contracts, real estate contracts, deposit
receipts, deeds, mortgages, deeds of trust, security agreements, bills of sale, land contracts of
sale and property management, and of any other areas that the commissioner deems necessary
and proper.
3. A thorough understanding of the obligations between principal and agent, the principles of real
estate and business opportunity practice, the applicable canons of business ethics, the provisions
of this chapter and rules made under this chapter.
4. An appropriate knowledge of other real estate practices and principles as determined by the
commissioner.
F. The commissioner shall ascertain by written, electronic or any other examination method that an
applicant for a license as a cemetery broker or a cemetery salesperson has:
1. Appropriate knowledge of the English language, including reading, writing and spelling, and of
elementary arithmetic.
2. A general understanding of:
(a) Cemetery associations, cemetery corporations and duties of cemetery directors and
officers.
(b) Plot ownership, deeds, certificates of ownership, contracts of sale, liens and leases.
(c) Establishing, dedicating, maintaining, managing, operating, improving, preserving and
conducting a cemetery.
(d) The provisions of this chapter and rules made under this chapter relating to the
organization and regulation of cemeteries and the licensing and regulation of cemetery
brokers and cemetery salespersons.
3. A general understanding of the obligations between principal and agent, the principles of
cemetery practice and the canons of business ethics pertaining to the operation of cemeteries
and the sale of cemetery property.
G. The commissioner shall ascertain by written, electronic or any other examination method that an
applicant for a license as a membership camping broker or a membership camping salesperson has:
1. An appropriate knowledge of the English language, including reading, writing and spelling, and
of elementary arithmetic.
2. A general understanding of:
(a) The general purposes and legal effect of contracts and agency contracts.
(b) Establishing, maintaining, managing and operating a membership campground.
(c) The provisions of this chapter and rules adopted under this chapter relating to the
organization and regulation of membership campgrounds and the licensing and
regulation of membership camping brokers and membership camping salespersons.
3. A general understanding of the obligations between principal and agent and the canons of
business ethics pertaining to the operation and promotion of membership campgrounds.
H. No renewal applicant for a real estate, cemetery or membership camping broker's or salesperson's
license shall be required to submit to an examination if the application is made within twelve months after
the license expires and the license is not cancelled, terminated or suspended at the time of application.
I. The examination for a broker's license shall be more exacting and stringent and of a broader scope
than the examination for a salesperson's license.
J. An applicant for a real estate salesperson's or broker's license who currently holds at least an
equivalent license in another state may be exempt from taking the national portion of the real estate
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examination if the applicant can demonstrate having previously passed a national examination within the
past five years that is satisfactorily similar to the one administered by the department.
K. Identification of each applicant whose licensing requirement was allowed to be met by an equivalent
alternative pursuant to this section shall be included in the annual performance report presented by the
board to the governor pursuant to section 32-2104.
L. An applicant for an original real estate salesperson's license, after completion of the requirements of
subsection B of this section, shall provide certification to the department at the time of application
evidencing completion of six hours of instruction in real estate contract law and contract writing. This
instruction shall include participation by the applicant in the drafting of contracts to purchase real property,
listing agreements and lease agreements.
M. The commissioner shall not issue a license to a person who has been convicted of a felony offense
and who is currently incarcerated for the conviction, paroled or under community supervision and under
the supervision of a parole or community supervision officer or who is on probation as a result of the
conviction.
32-2125. Licenses for corporations, limited liability companies or partnerships
A. A corporation, limited liability company or partnership applying for a broker's license for the entity shall
designate a natural person who is licensed as a broker and who is an officer of the corporation, manager
of the limited liability company if management of the limited liability company is vested in one or more
managers, member of the limited liability company if management is vested in the members or partner of
the partnership who shall act as designated broker. The license shall extend no authority to act as
designated broker to any other person. This subsection does not apply to a corporation or limited liability
company applying for a license under subsection B of this section. An entity's broker's license issued
pursuant to this subsection shall run concurrently with the corporation's, limited liability company's or
partnership's designated broker's license.
B. An employing broker may engage the services of salespersons and associate brokers who act through
and on behalf of professional corporations or professional limited liability companies that are licensed by
the department. A designated broker who acts on behalf of an employing real estate entity is permitted to
become a professional corporation or a professional limited liability corporation. Any person so engaged
shall be separately licensed. The department shall issue to or renew a license under this subsection only
for a professional corporation or a professional limited liability corporation whose shareholders, members
or managers hold active real estate licenses. A corporation licensed under this subsection shall meet the
requirements of title 10, chapter 20. A limited liability company licensed under this subsection shall meet
the requirements of title 29, chapter 4, article 11. A professional corporation or professional limited liability
company shall not be licensed as an employing broker.
C. The license of a corporation or limited liability company licensed under subsection B of this section
terminates only upon the death of a shareholder, member or manager or any other change of
shareholders, members or managers, except that any remaining shareholder, member or manager who
was an authorized officer and shareholder prior to the change remains authorized to continue business
under the corporation's or limited liability company's license for up to an additional ninety days pending
the issuance of a new license.
D. The commissioner may suspend, revoke or deny renewal or the right of renewal of the license of a
corporation, limited liability company or partnership licensed under this section if the corporation, limited
liability company or partnership or any shareholder, officer, agent, partner or member of a corporation,
limited liability company or partnership violates any of the provisions of this chapter.
E. Nothing in this section shall be construed to enlarge the functions of salespersons, to permit
salespersons to assume any of the responsibilities or functions of brokers or to relieve the commissioner
of any regulatory power or authority over salespersons or brokers.
F. A corporation, limited liability company or partnership licensed under subsection A of this section or a
professional corporation or professional limited liability company licensed under subsection B of this
section is exempt from the education requirements imposed pursuant to this chapter. The commissioner
shall not charge a license fee or a renewal fee pursuant to section 32-2132 to a corporation, professional
corporation, limited liability company, professional limited liability company or partnership licensed or
approved under this section.
G. A corporation, limited liability company or partnership licensed under this section shall report to the
department within ten days:
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1. Any change in officers, directors, members, managers or partners or any change of control of
the entity.
2. Any amendment to its articles of incorporation or organization or to its partnership agreement.
3. If a corporation, when a person becomes an owner of ten per cent or more of the stock in the
corporation.
4. The dissolution of the corporation, limited liability company or partnership.
32-2125.01. Issuance of license; multiple licenses; use
A. When the requirements for application, examination and payment of fees are completed to the
satisfaction of the commissioner, the commissioner shall issue the license applied for to the applicant.
Any person who has passed the state examination for broker or salesperson must become licensed
within one year from the date of the examination. Failure to comply with this section will necessitate the
submission to and passing of another examination.
B. Not more than one license shall be issued and outstanding to or in favor of a licensee at any one time,
except that a person licensed as a real estate broker or real estate salesperson may engage in cemetery
or membership camping sales activities without being separately licensed to engage in these activities. A
real estate licensee may have only one employing broker in each of the following categories:
1. Cemetery.
2. Membership camping.
3. Real estate.
C. A designated or employing real estate broker may engage in cemetery or membership camping sales
activities and may employ cemetery and membership camping salespersons and associate brokers
without being separately licensed as a cemetery or membership camping broker or salesperson.
32-2125.02. Nonresident licensees; service of process; employment
A. An application for and acceptance of a license as a nonresident salesperson or broker shall be
deemed to constitute irrevocable appointment of the commissioner as the agent or attorney in fact of the
licensee for the acceptance of service of process issued in this state in any action or proceeding against
the licensee arising out of the licensing, out of transactions under the license or in any action which may
result in payment from the real estate recovery fund.
B. Duplicate copies of any process shall be served on the commissioner. The plaintiff at the time of
service shall pay the commissioner fifteen dollars, taxable as costs in the action. On receiving this service
the commissioner shall promptly forward a copy of the service by certified mail to the licensee at the
licensee's last address of record with the commissioner. Process served on the commissioner pursuant to
this subsection constitutes service of process on the licensee as though the licensee were personally
served with the process in this state.
C. A nonresident licensee shall accept employment or compensation as a nonresident licensee only
under section 32-2155 and only from a broker who is actively licensed in this state.
D. A nonresident broker shall maintain in this state the records required by section 32-2151.01 and shall
notify the commissioner of the address where the records are kept.
E. Broker or salesperson license applicants who do not reside in this state are required to complete a
minimum of a twenty-seven hour course that is specific to this state's real estate statutes, rules, practices
and procedures and that is prescribed and approved by the commissioner and are required to pass the
real estate school examination before taking this state's examination. The subject matter and course
outline shall cover areas specific to this state's real estate practice and law. The requirements of this
subsection also apply, to the extent applicable, to broker or salesperson applicants who wish to use
college credit in fulfillment of the required ninety prelicensure hours.
F. The commissioner may adopt rules necessary for the regulation of nonresident licensees.
32-2125.03. Confidentiality of licensee's residential address, electronic mail address, residential
telephone number and social security number
A. Notwithstanding any other law, a licensee's or applicant's residential address or residential telephone
number maintained by the department shall not be available to the public unless the commissioner
determines that disclosure of the residential address or residential telephone number, or both, serves the
interests of justice and is in the public interest.

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B. A licensee's or applicant's electronic mail address shall not be released or made available for
inspection to any person other than a court or a governmental agency that will use the electronic mail
address for a legitimate court or governmental purpose.
C. The residential address, electronic mail address and residential telephone number of a licensee whose
license is placed on inactive status are confidential unless the commissioner determines that disclosure of
the addresses and telephone number serves the interests of justice and is in the public interest.
D. The department may not release a licensee's social security number or make a licensee's social
security number available for inspection by any person other than a court or a governmental agency that
will use the information for a legitimate governmental purpose.
32-2126. Place of business required; notice of change in location; failure to give notice as
cancellation of license; signs
A. Each employing broker shall have and maintain a definite place of business. Notice of change of
business location shall be given to the commissioner in writing and the commissioner shall issue a new
license for the unexpired period. Change or abandonment of a business location without notice shall
automatically cancel the broker's license and shall sever the license of any salesperson or associate
broker employed by the employing broker. If an employing broker's license is cancelled pursuant to this
subsection and the broker's license is later reinstated, any salesperson or associate broker employed by
the employing broker whose license was severed pursuant to this subsection may be rehired.
B. Each designated broker and, if applicable, each employing broker shall cause a sign to be affixed at
the entrance to the broker's place of business, in a place and position clearly visible to all entering the
place of business, with the name of the broker, the name under which the broker is doing business if
other than the broker's given name, and sufficient wording to establish that the person is a real estate
broker, cemetery broker or membership camping broker. In addition to any other applicable law, the sign
shall conform to rules adopted by the commissioner.
C. Upon removal from any location the broker shall remove the sign from the location. A broker shall not
display any name at designated places of business named in the broker's license other than the name
under which the broker is licensed.
32-2127. Licenses for additional places of business; branch office manager; broker's temporary
absence
A. When a broker maintains more than one place of business within the state he shall be required to
procure an additional license for each branch office maintained.
B. Branch office licenses shall be issued in the same name as the principal office license is issued, and
the license must be posted in the branch office. Branch office signs shall conform to the provisions for the
principal office and shall include the designation "branch office".
C. Each branch office shall be under the management of a broker or a licensed salesman.
D. If a designated broker is unable to act within twenty-four hours, he may designate a licensee whom he
employs or another designated broker to act in his behalf. The designated broker shall make this
designation in writing and shall keep the original designation at his office for one year from its effective
date. A copy of this designation must be attached to any hire, sever or renewal form submitted to the
department which is signed by the designated broker's designee. This designation shall not exceed thirty
days' duration and may authorize the designee to perform any and all duties the designated broker may
legally perform, except that a salesperson shall not be authorized to hire or sever licensees. A written
designation is required for each temporary absence.
32-2128. Display and possession of license certificate
A. The designated broker's and, if applicable, the employing broker's license certificate shall be
prominently displayed in the office of the broker, and all other license certificates shall be readily
available. A salesperson's or associate broker's license certificate shall remain in the possession of the
employer until it is cancelled, terminated, suspended or revoked by the department or until the licensee is
severed from employment, when the designated broker shall dispose of the license certificate.
B. A designated broker may comply with the possession requirements for a salesperson's or associate
broker's license certificate prescribed by subsection A of this section by doing both of the following:
1. Accessing the licensee's record in the department's public database that the department posts
on its website.
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2. Printing a copy of the record that shows current and active licensure or having the record
available electronically.
32-2129. Advance payment of license fees
A. All license fees shall be paid in advance and shall be the same regardless of the time of the year the
license is issued.
B. If the license fees or other fees that relate to licensure are paid with a check that is not honored by the
financial institution on which it is written, the department may deny or cancel the license.
C. An original license shall be for a period of two years up to and including the last day of the month in
which the license was granted. A renewal license shall be effective as of the date of issuance, but no
earlier than the first day after the expiration of the previous license. Regardless of the date of issuance,
the renewed license is for a two year period beginning on the first day after the expiration of the previous
license.
D. License applicants shall pay fees as specified in this chapter.
32-2130. Renewal of licenses; education requirements; broker licensee renewal as salesperson
licensee
A. A license may be renewed in a timely manner by filing an application for renewal in the manner
prescribed by the commissioner, by paying the renewal fee specified in this chapter and by presenting
evidence of attendance at a school certified by the commissioner during the preceding license period of
twenty-four credit hours for salespersons and associate brokers and thirty credit hours for designated
brokers or for associate brokers employed by a designated broker pursuant to section 32-2151.01,
subsection G, or a lesser number of credit hours prescribed by the commissioner, of real estate oriented
continuing education courses prescribed and approved by the commissioner. The total number of credit
hours shall be accrued at a rate of twenty-four credit hours for salespersons and associate brokers and
thirty credit hours for designated brokers or for associate brokers employed by a designated broker
pursuant to section 32-2151.01, subsection G during each twenty-four month period of licensure. The
department shall maintain a current list of approved courses. The commissioner may waive all or a
portion of the continuing education requirement for good cause shown. The commissioner shall
determine by rule the content of the renewal credit hours. The renewal credit hours may include the
commissioner's current topics, including short sales. For the purposes of this subsection, "short sales"
means real estate transactions in which the sales price is insufficient to pay the loan encumbering the
property in addition to the costs of sale and the seller is unable to pay the difference.
B. If an applicant is renewing a license within one year after it expired, the applicant may apply continuing
education hours completed after the expiration toward the continuing education required for renewal.
C. Each renewal application shall contain, as applicable, the same information required in an original
application pursuant to section 32-2123.
D. Cemetery brokers and salespersons and membership camping brokers and salespersons are exempt
from the educational requirements of this section.
E. Nothing in this section requires a licensee to attend department produced or sponsored courses if
approved courses are otherwise available.
F. Between the expiration date of the license and the date of renewal of the license, the rights of the
licensee under the license expire. While the license is expired it is unlawful for a person to act or attempt
or offer to act in a manner included in the definition of a real estate, cemetery or membership camping
broker or salesperson. If the license of an employing broker expires under this subsection, the licenses of
persons who are employed by the employing broker shall be severed from the employing broker on the
license expiration date of the employing broker. These persons may be rehired on renewal of the
employing broker's license. The department shall terminate a license that has been expired for more than
one year.
G. Except as provided in section 32-4301, no more than one year after the license expiration date, the
department shall renew a license without requiring the applicant to submit to an examination if the
applicant held a license that was not canceled or suspended at the time of expiration. Except as provided
in section 32-4301, the license period for a license renewed pursuant to this subsection commences the
day after the expiration date of the expired license. Except as provided in section 32-2131, subsection A,
paragraph 4 or 6, an applicant whose license has been terminated or revoked does not qualify for license
renewal.
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H. Any employee or immediate family member of any employee of this state who, pursuant to section 322110 or any other law, rule or requirement, is prohibited from using a license issued under this chapter
shall have, on the request of the employee or family member, the license placed on inactive status, shall
have the right to renew the license and shall not be required to pay further fees until the employee or
family member is again eligible to use the license. Renewal fees for the license shall not be required for
only as long as the employee or family member is prohibited from using the license.
I. The department shall not renew the license of a person who has been convicted of a felony offense and
who is currently incarcerated for the conviction, paroled or under community supervision and under the
supervision of a parole or community supervision officer or who is on probation as a result of the
conviction. This subsection does not limit the commissioner's authority and discretion to deny the renewal
for any other reason pursuant to this chapter.
J. A real estate broker licensee may renew as a real estate salesperson licensee without having to meet
the requirements prescribed by section 32-2124, subsection B. If a person renews as a real estate
salesperson pursuant to this subsection, the person shall pay the salesperson's renewal fee as
prescribed in section 32-2132. If the person subsequently wants to obtain a real estate broker license,
the person must meet the requirements of this chapter, including the requirements prescribed by section
32-2124, subsection C.
32-2131. Reinstatement of license
A. The commissioner may reinstate a license that was issued under this article and that expired or was
canceled, terminated, suspended or revoked as follows:
1. For a license that expired pursuant to section 32-2130, subsection F, by renewal application
pursuant to this article.
2. For a license canceled pursuant to section 32-2126, subsection A or section 32-2129,
subsection B or any other lawful authority:
(a) If within the license period, by reapplication and payment of applicable fees.
(b) If after expiration of the license, by original or renewal application, as appropriate,
pursuant to this article.
3. For a license terminated pursuant to section 32-2188, subsection I, by:
(a) Repayment in full to the real estate recovery fund.
(b) Original application pursuant to this article.
(c) Providing evidence that the judgment that caused the recovery fund payment has
been fully satisfied.
4. For a license terminated pursuant to section 32-2130, subsection F, by original application
pursuant to this article.
5. For a license suspended pursuant to section 32-2153, 32-2154 or 32-2157 or any other lawful
authority:
(a) If suspended for failure on the part of the licensee to meet procedural or educational
requirements for maintaining the license, and the requirements have subsequently been
fully met, and the suspension has been vacated:
(i) If within the license period, by reapplication and payment of applicable fees.
(ii) If after expiration of the license, by original or renewal application, as
appropriate, pursuant to this article.
(b) If suspended by order of the commissioner for a specified length of time, and the
suspension period has ended:
(i) If within the license period, by reapplication and payment of applicable fees.
(ii) If after expiration of the license, by original or renewal application, as
appropriate, pursuant to this article.
6. For a license revoked pursuant to section 32-2153 or any other lawful authority, by original
application pursuant to this article.
7. For a license suspended or revoked by order of the commissioner and this order is
subsequently vacated as to the licensee, by reapplication only. No fees may be assessed. The
reapplication may be initiated by the department on behalf of the licensee.
B. Except for canceled licenses, reinstatement of a license pursuant to subsection A of this section shall
not be made for any licensee who is the subject of a department investigation into alleged violations of
this chapter or of a pending administrative proceeding pursuant to article 3 of this chapter.
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C. This section shall not be interpreted to lessen or reduce the qualifications otherwise required of license
applicants under this article or the department's authority to deny a person's application for license
reinstatement who does not otherwise meet all of the requirements.
32-2132. Fees
A. Except as provided in subsection D of this section, the following fees shall be charged and shall not be
refunded by the commissioner after issuance of a receipt for payment:
1. A broker's examination application fee of not less than thirty-five dollars and not more than one
hundred twenty-five dollars.
2. A broker's examination fee of not less than thirty-five dollars and not more than one hundred
dollars.
3. A broker's license fee of not less than seventy-five dollars and not more than two hundred fifty
dollars.
4. A broker's renewal fee of not less than one hundred dollars and not more than four hundred
dollars.
5. A salesperson's examination application fee of not less than fifteen dollars and not more than
seventy-five dollars.
6. A salesperson's examination fee of not less than fifteen dollars and not more than fifty dollars.
7. A salesperson's license fee of not less than thirty-five dollars and not more than one hundred
twenty-five dollars.
8. A salesperson's renewal fee of not less than sixty dollars and not more than two hundred
dollars.
9. A branch office broker's license fee or renewal fee of not less than sixty dollars and not more
than two hundred dollars.
10. A fee for a change of name and address of licensee on records of the department of not more
than twenty dollars.
11. A duplicate license fee of five dollars.
12. A fee for reinstatement of license within license period of five dollars.
13. A fee for each certificate of correctness of copy of records or documents on file with the
department of one dollar, plus the cost to the department for reproducing the records or
documents.
14. A temporary broker's license fee of not less than fifteen dollars and not more than fifty dollars.
15. A temporary cemetery salesperson's license fee of not less than fifteen dollars and not more
than fifty dollars.
16. A membership camping salesperson certificate of convenience fee of not less than fifteen
dollars and not more than fifty dollars.
17. Fees in an amount to be determined by the commissioner by rule for the following:
(a) A certificate of approval or renewal to operate a school.
(b) An instructor or other school official approval or renewal fee.
(c) A live classroom continuing education course approval or renewal fee.
(d) A live classroom prelicensure education course approval or renewal fee.
(e) A continuing education distance learning course approval or renewal fee.
B. A corporation, partnership or limited liability company shall not be assessed a fee for the issuance of a
broker's license.
C. The commissioner may contract for the processing of applications and the examination of applicants
for licensure. The contract may provide for specific fees or a reasonable range for fees as determined by
the commissioner for examination applications and examinations to be paid directly to the contractor by
the applicant. These fees may not exceed the amounts prescribed in subsection A, paragraphs 1, 2, 5
and 6 of this section.
D. For good cause shown the commissioner may refund fees previously collected.
32-2133. Temporary broker's license
A. Notwithstanding any other law, the commissioner may issue a temporary license as a broker to a
licensed or unlicensed person for the purpose of winding up the existing or pending business of a
licensed broker in the following cases:

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1. To the surviving spouse or next of kin or to the administrator or personal representative or the
employee of the administrator or personal representative of a deceased licensed broker.
2. To the spouse, next of kin, employee, legal guardian or conservator of a licensed broker in a
state of disability by sickness, injury or insanity.
B. Each temporary license is for a period of not over ninety days and shall not be extended for a longer
period, except that a license issued to a personal representative or administrator or the employee of the
personal representative or administrator pursuant to subsection A, paragraph 1 continues until the
personal representative or administrator disposes of the deceased broker's business, but not to exceed a
period of fifteen months.
C. No more than one temporary license may be issued to or with respect to the same individual within any
one year period.
D. A temporary licensee has the same license powers and obligations as under a permanent license.
32-2134. Temporary cemetery salesperson's license
Notwithstanding any other licensing requirement under this chapter, the commissioner may issue a one
time thirty day certificate of convenience without examination to any person who has applied and
otherwise qualifies for a membership camping salesperson's license. An employing membership camping
broker shall certify by affidavit to the commissioner that the salesperson applicant will be trained in
applicable membership camping and contract laws before participation in any offer or sale.
32-2134.01. Membership camping salesperson certificate of convenience
Notwithstanding any other licensing requirement under this chapter, the commissioner may issue a one
time thirty day certificate of convenience without examination to any person who has applied and
otherwise qualifies for a membership camping salesperson's license. An employing membership camping
broker shall certify by affidavit to the commissioner that the salesperson applicant will be trained in
applicable membership camping and contract laws before participation in any offer or sale.
32-2135. Real estate schools; courses of study; instructors; certification
A. Except as provided in section 32-4301, before offering a course of study towards completion of the
education requirement for real estate licensure or renewal of licensure, a school shall obtain from the
commissioner a certificate of approval or renewal to operate a school for a period of at least four years. A
school shall also obtain a certificate of course approval for each course offered for credit that is not
currently approved for another school. Each school is responsible for the content of any course it offers
and for the professional administration and teaching of the course. Live classroom prelicensure
education, live classroom continuing education and distance learning continuing education courses are
subject to approval pursuant to this section.
B. Each approved school shall issue a certificate of real estate course attendance to each person who
completes an approved prelicensure or continuing education course. An applicant for renewal of licensure
as provided by section 32-2130 shall file evidence of the certificates issued by the school with the
commissioner showing the number of credit hours and course of study required for renewal.
C. The commissioner may withdraw or deny certification or approval of real estate schools, educational
courses or real estate instructors for any acts inconsistent with the requirements of this chapter, including:
1. The commission of or the failure to report a violation by an approved school or instructor of any
provision of this chapter or rules adopted pursuant to this chapter.
2. Improper certification of student attendance or performance.
3. Any act that is grounds for discipline under section 32-2153.
4. Teaching information or using course materials that have not been approved by the
commissioner.
5. Failing to attend any continuing education course required by the commissioner.
6. Filing any false or misleading application, report or documentation with the department.
7. Teaching course content that is not current or that has substantially changed from the course
as approved.
D. A real estate school, through any owner, director, administrator, instructor or other agent, shall not:
1. Offer a course of study for credit that is not approved by the department, except that the school
may advertise a course as pending approval before its approval.

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2. Promote or advertise the school using false or misleading statistics or testimonials or any other
form of deceptive advertisement.
E. The commissioner may determine minimal content requirements for approving educational courses
and appropriate professional qualifications for approving instructors to teach individual educational
courses.
F. At least thirty days before holding a course of study for completion of the education requirements
leading to licensure of real estate applicants or for license renewal requirements, an application for a
certificate of course approval or renewal must be filed with the department. For a live classroom course,
the application shall include a course outline with sufficient detail to clearly identify the scope and content
of the course. The outline shall state a desired instructional outcome for the course. A prelicensure
education course outline that is submitted for approval shall be divided into estimated fifty minute
instructional segments. Course approval shall not be unreasonably withheld and shall not be issued later
than thirty days after filing with the department for a live classroom course. A continuing education
distance learning course approval shall not be issued later than ninety days after filing with the
department. If the approvals under this subsection are not granted within the time frames prescribed by
this subsection, the course shall be automatically approved on a provisional basis for one hundred eighty
days, unless the department has otherwise notified the applicant of specific deficiencies or unfulfilled
requirements for the course submission. A provisional approval may be withdrawn by the department
upon fifteen days' advance notice if the department's review of the course subsequently reveals course
deficiencies or unfulfilled course requirements. If not withdrawn, the course approval shall remain
approved for the entire course approval period. Course approval shall be for a period of at least four
years if the contents of the course remain current and substantially unchanged. The course may not be
taught if the content ceases to be current or is substantially changed. The department may establish by
rule additional appropriate requirements for approval of a distance learning course.
G. For a currently approved course:
1. The school shall submit notice to the department at least fourteen days before holding the
course to permit department employees to monitor the course. The notice is not otherwise
subject to review and approval by the department.
2. With the permission of the school that received original approval for the course, another school
that desires to offer the course is subject only to the fourteen day notice requirement before
holding the same course. No additional review and approval by the department is required.
H. The department shall approve for continuing education credit any course of study proposed by a real
estate school if the course satisfies the commissioner's requirements and is held in this state.
I. The department may approve for continuing education credit any course of study proposed by a real
estate school if the course satisfies the commissioner's requirements and is held outside this state. Upon
the commissioner's request, the school shall either:
1. Provide the department with a videotape or videotapes of the course.
2. Make arrangements that are approved by the department for monitoring the course.
J. An instructor shall file with the department an application for instructor approval or renewal. Instructor
approval shall be for at least four years from the date of approval and is subject to amendment during the
license period only if information material to the instructor's qualifications has changed. A person holding
instructor approval to teach specific subject matter is not subject to additional or duplicate approval
requirements during the original approval period, except that an additional instructor competency area
may be added during the license period on submission by the instructor of evidence of competency in
such additional competency area.
K. Beginning January 1, 2012, in the twenty-four months before application, each instructor original or
renewal applicant, other than a panelist, guest speaker, an attorney or out-of-state instructor, shall attend
at least a three hour professional seminar or workshop, approved by the department, emphasizing
instruction methods, techniques and skills. At the discretion of the commissioner this requirement may be
waived based on individual request review.
L. The thirty day and fourteen day course filing time frames prescribed in this section may be waived by
the department for good cause shown.
M. Unless subject to a violation or suspected violation listed in subsection C of this section, the
department's approval of a school, school official, instructor or course shall be processed in a time frame
consistent with the time frames set forth in this section.

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N. This section does not affect the department's ability to withdraw or deny certification or approval of real
estate schools, education courses or real estate instructors for a violation of this chapter.
32-2136. Broker management clinics
A. The department shall determine the instructor qualifications for teaching broker management clinics
and the course content of broker management clinics for persons required to attend these clinics
pursuant to subsection C of this section.
B. A broker management clinic shall consist of three courses of three hours each. The course topics shall
be broker statute and rule requirements, including instruction on department audits, and the legal
obligations of designated brokers, broker policy development and employee supervision and broker
responsibilities and related topics. A broker management clinic shall address record keeping
requirements, trust fund accounts, advertising and promotions, employment agreements, contracts,
fiduciary duties, material disclosures, department investigations and risk management. A broker
management clinic may be designed to address property management activities, a specialty field of real
estate or sales activities, or any combination described in this subsection.
C. An applicant for an original real estate broker's license shall attend a broker management clinic before
activating the license. A broker shall attend a broker management clinic before becoming a designated
broker, unless the broker has attended a broker management clinic during the preceding twenty-three
months. All designated brokers and associate brokers employed by a designated broker pursuant to
section 32-2151.01, subsection G, shall attend a broker management clinic once during each twenty-four
months of licensure after their initial attendance.
32-2137. Cancellation of license
On request of a licensee, the department may cancel that person's license if both of the following are true:
1. The licensee is not presently under investigation by the department.
2. The department has not commenced any disciplinary proceeding against the licensee.

Article 3 Regulation
32-2151. Disposition of funds; trust money deposit requirements
A. Unless otherwise provided in writing by all parties to a transaction, any licensed real estate broker who
does not immediately place all funds entrusted to the broker, in the broker's capacity as a real estate
broker, in a neutral escrow depository in this state shall upon receipt place all such funds in a trust fund
account in a federally insured or guaranteed account in a depository located in this state. The
commissioner may adopt such rules as are necessary to provide for records to be maintained and the
manner in which such trust fund account deposits may be made.
B. The following minimum requirements apply to each broker's trust fund account:
1. The broker shall make deposits to trust fund accounts by deposit slips. Receipts or other
documentation shall identify each transaction, the date and the amount of each deposit and the
names of parties involved in the transaction represented by the deposit and monies shall be used
only for the purpose for which the monies were deposited.
2. The broker shall retain a complete record of all monies received in connection with a real
estate transaction in the main or branch office of the designated broker in this state or at an offsite storage location in this state if the broker provides prior written notification of the street
address of the off-site storage location to the department. A broker's records shall be kept
according to generally accepted accounting principles and shall include a properly descriptive
receipts and disbursement journal and client ledger. The broker shall keep any computerized
records in a manner allowing reconstruction in the event of destruction of electronic data. The
broker shall maintain a trust fund account bank reconciliation and client ledger balance on a
monthly basis and shall remove any interest earned on a trust fund account at least once every
twelve months. A broker shall not permit advance payment of monies belonging to others to be
deposited in the broker's personal account or to be commingled with personal monies. It is not
considered commingling if, when establishing a trust fund account, a broker deposits monies not

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exceeding three thousand dollars to keep the account open or to avoid charges for an insufficient
minimum balance.
C. An agreement to place monies entrusted to the broker in a depository that is located outside of this
state is valid if all parties to the transaction agree in writing and either:
1. The monies are placed in a property management trust account established pursuant to
section 32-2174 and:
(a) The account is federally insured or guaranteed.
(b) The property management agreement contains:
(i) Disclosure that the department's regulatory protections of the owner's monies
may be significantly hampered.
(ii) Disclosure that the owner may not have access to or any control over the trust
account, except to audit and review the status of the account.
(iii) An addendum that has the signed authorization by an appropriately
empowered official of the depository in which the trust account is placed that the
trust account and all related documentation will be open to examination by the
department and the owner.
2. If the monies are not deposited in a property management trust account, the broker discloses
to the parties to the transaction that potential risks may accrue as the result of depositing the
monies in a depository outside this state.
D. This section shall not be construed to allow a broker to commingle monies entrusted to the broker with
the broker's own monies, unless the commissioner adopts rules that allow commingling.
32-2151.01. Broker requirements; record keeping requirements; definition
A. Each licensed employing broker shall keep records of all real estate, cemetery, time-share or
membership camping transactions handled by or through the broker and shall keep employment records,
including copies of employment status, for all current and former employees. The records required by this
section shall include copies of earnest money receipts, confirming that the earnest money has been
handled in accordance with the transaction, closing statements showing all receipts, disbursements and
adjustments, sales contracts and, if applicable, copies of employment agreements. The records shall be
open at all reasonable times for inspection by the commissioner or the commissioner's representatives.
The records of each transaction and employment records shall be kept by the broker for a period of at
least five years from the date of the termination of the transaction or employment. The records shall be
kept in the employing broker's principal office or licensed branch office in this state or at an off-site
storage location in this state if the broker provides prior written notification of the street address of the offsite storage location to the department.
B. Except as provided by section 32-2174, subsection C, a broker shall not grant any person authority to
withdraw monies from the broker's trust fund account unless that person is a licensee under that broker's
license.
C. A broker shall specifically state in the real estate purchase contract, lease agreement or receipt for
earnest money the type of earnest money received in any real estate transaction, whether it is cash, a
check, a promissory note or any other item of value.
D. All licensees shall promptly place all cash, checks or other items of value received as payment in
connection with a real estate transaction in the care of the designated broker.
E. The broker shall maintain each real estate purchase contract or lease agreement and the transaction
folder in which it is kept in a chronological log or other systematic manner that is easily accessible by the
commissioner or the commissioner's representatives.
F. Sales transaction folders shall include:
1. Confirmation that the earnest monies or other monies handled by or through the broker were
handled according to instructions given by or agreed to by the parties to the transaction.
2. A complete copy of the sales contract, any escrow account receipt, any closing or settlement
statement and, if applicable, a copy of the escrow instructions, listing agreement, employment
agreement and release of escrow monies.
G. The designated broker shall review each listing agreement, purchase or nonresidential lease
agreement or similar instrument within ten business days of the date of execution by placing the broker's
initials and the date of review on the instrument on the same page as the signatures of the parties. A

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designated broker may authorize in writing an associate broker who the designated broker employs to
review and initial these instruments on the designated broker's behalf.
H. The broker shall retain all real estate purchase and nonresidential lease contracts and employment
agreements, or copies of these documents, in the employing broker's principal office or licensed branch
office or at an off-site storage location in this state if the broker provides prior written notification of the
street address of the off-site storage location to the department.
I. The broker shall retain an original, a copy or a microfilm copy of any document evidencing a rejected
offer to purchase real property as a matter of record for at least one year. In instances that result in
binding contracts, the broker shall retain prior rejected offers for at least five years.
J. If real property in a development is sold or leased by a developer without the services of a listing or
selling broker, the developer shall keep all records required by subsections A and C of this section.
K. For the purposes of this section, "business day" means a day that is not a Saturday, a Sunday or any
other legal holiday in this state.
32-2151.02. Real estate employment agreements; definition
A. All real estate employment agreements shall:
1. Be written in clear and unambiguous language.
2. Fully set forth all material terms, including the terms of broker compensation.
3. Have a definite duration or expiration date, showing dates of inception and expiration.
4. Be signed by all parties to the agreement.
B. An employing broker shall not assign a real estate employment agreement to another broker without
the express written consent of all parties to the agreement at the time of the assignment.
C. A licensee shall not procure, or attempt to procure, a real estate employment agreement from a party
who is already subject to an existing exclusive real estate employment agreement unless the licensee
has received written acknowledgment from the party that the execution of additional real estate
employment agreements could expose the party to liability for substantial additional commissions.
Nothing in this subsection shall be construed to abrogate any civil liability of a licensee arising out of this
conduct.
D. A real estate employment agreement is not required for a licensee to represent a party in a
transaction.
E. For the purposes of this section, "real estate employment agreement" means a written agreement by
which a real estate broker is entitled to compensation for services rendered pursuant to section 44-101,
paragraph 7.
32-2152. Action by broker or salesperson to collect compensation
A. An action for the collection of compensation earned may be maintained in the courts of the state by
any broker or salesperson. To commence the action the complaint shall allege that the plaintiff was a
qualified licensed broker or salesperson at the time the claim arose. Prior to hearing the action the court
shall require the plaintiff to prove the alleged qualifications.
B. The commissioner shall not entertain complaints regarding purely civil disputes between licensees
concerning the earning, splitting or nonpayment of compensation.
C. Nothing in this section shall be construed to permit the payment or receipt of compensation in violation
of sections 32-2155 or 32-2163.
32-2153. Grounds for denial, suspension or revocation of licenses; letters of concern; provisional
license; retention of jurisdiction by commissioner; definitions
A. The commissioner may suspend or revoke a license, deny the issuance of a license, issue a letter of
concern to a licensee, issue a provisional license or deny the renewal or the right of renewal of a license
issued under this chapter if it appears that the holder or applicant, within five years immediately
preceding, in the performance of or attempt to perform any acts authorized by the license or by this
chapter, has:
1. Pursued a course of misrepresentation or made false promises, either directly or through
others, whether acting in the role of a licensee or a principal in a transaction.
2. Acted for more than one party in a transaction without the knowledge or consent of all parties
to the transaction.

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3. Disregarded or violated any of the provisions of this chapter or any rules adopted by the
commissioner.
4. Knowingly authorized, directed, connived at or aided in the publication, advertisement,
distribution or circulation of any material false or misleading statement or representation
concerning the licensee's business or any land, cemetery property, subdivision or membership
campground or camping contract offered for sale in this or any other state.
5. Knowingly used the term "real estate broker", "cemetery broker" or "membership camping
broker" without legal right to do so.
6. Employed any unlicensed salesperson or unlicensed associate broker.
7. Accepted compensation as a licensee for the performance of any of the acts specified in this
chapter from any person other than the licensed broker to whom the licensee is licensed, the
licensed professional corporation of which the licensee is an officer and shareholder or the
licensed professional limited liability company of which the licensee is a member or manager.
8. Represented or attempted to represent a broker other than the broker to whom the
salesperson or associate broker is licensed.
9. Failed, within a reasonable time, to account for or to remit any monies, to surrender to the
rightful owner any documents or other valuable property coming into the licensee's possession
and that belongs to others, or to issue an appraisal report on real property or cemetery property in
which the licensee has an interest, unless the nature and extent of the interest are fully disclosed
in the report.
10. Paid or received any rebate, profit, compensation or commission in violation of this chapter.
11. Induced any party to a contract to break the contract for the purpose of substituting a new
contract with the same or a different principal, if the substitution is motivated by the personal gain
of the licensee.
12. Placed a sign on any property offering it for sale or for rent without the written authority of the
owner or the owner's authorized agent.
13. Solicited, either directly or indirectly, prospects for the sale, lease or use of real property,
cemetery property or membership camping contracts through a promotion of a speculative nature
involving a game of chance or risk or through conducting lotteries or contests that are not
specifically authorized under this chapter.
14. Failed to pay to the commissioner the renewal fee as specified in this chapter promptly and
before the time specified.
15. Failed to keep an escrow or trust account or other record of funds deposited with the licensee
relating to a real estate transaction.
16. Commingled the money or other property of the licensee's principal or client with the
licensee's own or converted that money or property to the licensee or another.
17. Failed or refused upon demand to produce any document, contract, book, record, information,
compilation or report that is in the licensee's possession or that the licensee is required by law to
maintain concerning any real estate, cemetery or membership camping business, services,
activities or transactions involving or conducted by the licensee for inspection by the
commissioner or the commissioner’s representative.
18. Failed to maintain a complete record of each transaction which comes within this chapter.
19. Violated the federal fair housing law, the Arizona civil rights law or any local ordinance of a
similar nature.
20. Tendered to a buyer a wood infestation report in connection with the transfer of residential
real property or an interest in residential real property knowing that wood infestation exists or that
the wood infestation report was inaccurate or false as of the date of the tender or that an
inspection was not done in conjunction with the preparation of the wood infestation report.
21. As a licensed broker, failed to exercise reasonable supervision over the activities of
salespersons, associate brokers or others under the broker's employ or failed to exercise
reasonable supervision and control over the activities for which a license is required of a
corporation, limited liability company or partnership on behalf of which the broker acts as
designated broker under section 32-2125.
22. Demonstrated negligence in performing any act for which a license is required.
23. Sold or leased a property to a buyer or lessee that was not the property represented to the
buyer or lessee.
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24. Violated any condition or term of a commissioner's order.
25. Signed the name of another person on any document or form without the express written
consent of the person.
26. As a licensed school, failed to exercise reasonable supervision over the activities for which a
license is required for an owner, director, administrator or instructor in the school's employ.
B. The commissioner may suspend or revoke a license, deny the issuance of a license, issue a letter of
concern to a licensee, issue a provisional license or deny the renewal or the right of renewal of a license
issued under this chapter when it appears that the holder or applicant has:
1. Procured or attempted to procure a license under this chapter for the holder or applicant or
another by fraud, misrepresentation or deceit, or by filing an original or renewal application which
is false or misleading.
2. Been convicted in a court of competent jurisdiction in this or any other state of a felony or of
any crime of forgery, theft, extortion, conspiracy to defraud, a crime of moral turpitude or any
other like offense.
3. Made any substantial misrepresentation.
4. Made any false promises of a character likely to influence, persuade or induce.
5. Been guilty of any conduct, whether of the same or a different character than specified in this
section, which constitutes fraud or dishonest dealings.
6. Engaged in the business of a real estate, cemetery or membership camping broker or real
estate, cemetery or membership camping salesperson without holding a license as prescribed in
this chapter.
7. Not shown that the holder or applicant is a person of honesty, truthfulness and good character.
8. Demonstrated incompetence to perform any duty or requirement of a licensee under or arising
from this chapter. For the purposes of this paragraph, "incompetence" means a lack of basic
knowledge or skill appropriate to the type of license the person holds or a failure to appreciate the
probable consequences of the licensee's action or inaction.
9. Violated the terms of any criminal or administrative order, decree or sentence.
10. Violated any federal or state law, regulation or rule that relates to real estate or securities or
that involves forgery, theft, extortion, fraud, substantial misrepresentation, dishonest dealings or
violence against another person or failure to deal fairly with any party to a transaction that
materially and adversely affected the transaction. This paragraph applies equally to violations of
which the licensee was convicted in any lawful federal or state tribunal and to any admissions
made in any settlement agreement by the licensee to violations.
11. Failed to respond in the course of an investigation or audit by providing documents or written
statements.
C. A judgment based on a court's finding or stipulation of fraud by a licensee following a trial on the merits
or a criminal conviction of a licensee that results in a payment from the real estate recovery fund is prima
facie evidence of a violation and grounds for discipline under this section.
D. The commissioner may deny, suspend or revoke the issuance of a license upon application by a
corporation, a limited liability company or a partnership if it appears that an owner, officer, director,
member, manager, partner, stockholder owning ten per cent or more of the stock in the corporation or
limited liability company or person exercising control of the entity is a current or former licensee whose
license as a broker or a salesperson has been denied, suspended or revoked.
E. The lapsing or suspension of a license by operation of law or by order or decision of the commissioner
or a court of law or the voluntary surrender of a license by a licensee shall not deprive the commissioner
of jurisdiction to do any of the following:
1. Proceed with any investigation of or action or disciplinary proceeding against the licensee.
2. Render a decision suspending or revoking the license, or denying the renewal or right of
renewal of the license.
3. Assess a civil penalty pursuant to section 32-2160.01.
F. For the purposes of this section:
1. "Letter of concern" means an advisory letter to notify a licensee that, while the conduct or
evidence does not warrant other disciplinary action, the commissioner believes that the licensee
should modify or eliminate certain practices and that continuation of the activities may result in
further disciplinary action against the licensee.

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2. "Provisional license" means a license that the department issues and that allows a licensee to
practice subject to either a consent order as prescribed in section 32-2153.01 or the
commissioner's terms, conditions and restrictions.
32-2153.01. Consent order; terms
In addition to any other authority granted to the commissioner in this chapter to issue orders, the
commissioner may issue a consent order on the agreement of both parties to an appealable agency
action or a contested case. The order shall include terms that the parties agree on and that the
commissioner, in the commissioner's discretion, believes are appropriate.
32-2154. Cease and desist orders; hearing
A. If it appears to the commissioner that any person has engaged, is engaging or is preparing to engage
in any act, practice or transaction that constitutes a violation of this chapter or any rule adopted or order
issued by the commissioner, the commissioner may issue an order directing any person to cease and
desist from engaging in the act, practice or transaction or doing any act in furtherance of the act, practice
or transaction, to make restitution or to take appropriate affirmative action, within a reasonable period of
time as prescribed by the commissioner, to correct the conditions resulting from the act, practice or
transaction.
B. A person aggrieved by a cease and desist order issued by the commissioner pursuant to this section
may request a hearing pursuant to title 41, chapter 6, article 10 and the commissioner may issue the
order or orders as the commissioner deems necessary to protect the public interest. The commissioner
may also bring an action in any court of competent jurisdiction against the person to enjoin the person
from continuing in violation of this chapter. These proceedings shall be promptly instituted and
determined.
32-2155. Restriction on employment or compensation of person as broker or salesperson
A. A broker shall employ and pay only active licensees, and a licensee shall accept employment and
compensation as a licensee only from the legally licensed broker to whom the licensee is licensed. If the
licensee is licensed through a professional corporation or a professional limited liability company, the
employing broker may pay and the licensee may receive compensation only through the licensed
professional corporation of which the licensee is an officer and shareholder or the licensed professional
limited liability company of which the licensee is a member or manager.
B. It is unlawful for a person, firm or corporation, whether obligor, escrow holder or otherwise, to pay or
deliver to anyone compensation for performing any of the acts specified by this chapter, as a broker, who
is not licensed at the time the service is rendered. An identification card or certificate of license issued by
the state real estate department showing that the person, firm or corporation holds a license for the year
in which the payment is made or earned shall be sufficient proof to relieve from any penalty for a violation
of this section the obligor, escrow holder or other person who relied in good faith on the card or certificate.
C. A real estate broker or real estate salesperson shall not collect compensation for rendering services in
negotiating loans secured by real property unless all of the following apply:
1. The broker or salesperson is licensed pursuant to title 6, chapter 9 or is an employee, officer or
partner of a corporation or partnership licensed pursuant to title 6, chapter 9.
2. The broker or salesperson has disclosed to the person from whom the compensation is
collected that the broker or salesperson is receiving compensation both for real estate brokerage,
when applicable, and for mortgage broker services.
3. The compensation does not violate any other state or federal law.
D. Notwithstanding subsection A of this section, brokers licensed under this chapter may employ
residential leasing agents or managers of residential rental properties, as prescribed by section 32-2121,
subsection A, paragraph 6. The exemption of residential leasing agents or managers of residential rental
property under article 2 of this chapter shall not be construed to exempt the designated broker from the
responsibility to exercise reasonable supervision over these leasing agents or managers.
32-2156. Real estate sales and leases; disclosure
A. No criminal, civil or administrative action may be brought against a transferor or lessor of real property
or a licensee for failing to disclose that the property being transferred or leased is or has been:
1. The site of a natural death, suicide or homicide or any other crime classified as a felony
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2. Owned or occupied by a person exposed to the human immunodeficiency virus or diagnosed
as having the acquired immune deficiency syndrome or any other disease that is not known to be
transmitted through common occupancy of real estate.
3. Located in the vicinity of a sex offender.
B. Failing to disclose any fact or suspicion as set forth in subsection A shall not be grounds for
termination or rescission of any transaction in which real property has been or will be transferred or
leased.
32-2157 Written notice of changes; summary suspensions; hearing; voluntary surrender of license
A. Except as provided in subsections B and C of this section, before suspending, revoking or denying the
renewal or the right of renewal of any license, or issuing any order prohibiting the sale or lease of property
or the sale of cemetery lots or membership camping contracts as provided by this chapter, the
commissioner shall present the licensee, owner, including the current owner of the property, operator,
agent or developer with written notice of the charges filed against the person, or reasons for prohibiting
the sale or lease, and shall afford the person an opportunity for a hearing pursuant to title 41, chapter 6,
article 10. Within twenty days after service of a notice of hearing, the respondent shall appear by filing a
written answer to the complaint. A licensee against whom the department has commenced a disciplinary
proceeding under this chapter may voluntarily surrender to the department the license if the surrender of
the license occurs not less than ten days prior to a hearing under this section. After the acceptance of a
voluntary surrender of a license under this section the department shall not thereafter issue a license
under this chapter to the licensee.
B. If the commissioner finds that the public health, safety or welfare imperatively requires emergency
action, and incorporates a finding to that effect in the commissioner's order, summary suspension of a
license or sales may be ordered. Grounds for issuance of an order of summary suspension include the
violation of any of the provisions of section 32-2153 and the termination of a license pursuant to section
32-2188, subsection I. A licensee, owner, including the current owner of the property, operator, agent or
developer may request a hearing pursuant to title 41, chapter 6, article 10. A summary suspension shall
be deemed to be final if a request for a hearing is not received within thirty days as provided by section
41-1092.03.
C. The department may issue a summary suspension when the department receives notice that a person
licensed pursuant to this chapter has been convicted of a felony offense and is currently incarcerated for
the conviction, paroled or under the supervision of a parole or community supervision officer or is on
probation as a result of the conviction. This subsection does not limit the commissioner's authority to
seek revocation of a license or other disciplinary action pursuant to this chapter.

32-2158. Hearing; witnesses; deposition; service of process
A. Any party to a hearing shall have the right to the attendance of witnesses in the party's behalf, in
person or by deposition, upon making a request therefor to the commissioner and designating the person
or persons requested to be subpoenaed. For the purpose of investigation or hearing the commissioner
shall have the powers vested in public officers by section 12-2212.
B. Process issued by the commissioner may be served by any person authorized to serve process of
courts of record or by any person designated for that purpose by the commissioner. The person serving
process shall receive compensation allowed by the commissioner, not to exceed the fees prescribed by
law for similar service. Any witness who appears by order of the commissioner shall receive the same
fees and mileage allowed by law to a witness in civil cases, which shall be paid by the party at whose
request the witness is subpoenaed. Fees for serving process and of witnesses subpoenaed by the
commissioner not upon the request of any other person shall be paid as other expenses of the
department are paid.
32-2159. Judicial review; costs; transcript
A. Except as provided in section 41-1092.08, subsection H, a final decision of the commissioner may be
appealed to the superior court in Maricopa county pursuant to title 12, chapter 7, article 6.
B. If the superior court declares an appealing party indigent, on appeal the department shall pay the costs
of the reporter's transcript of proceedings and shall produce a certified copy of all documents and
evidence in the administrative record at no charge.
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32-2160. Filing of complaint by commissioner; prosecution
A. The commissioner may file a complaint for a violation of this chapter before a court of competent
jurisdiction and may in person or by his deputies, assistants or counsel assist in the prosecution of the
complaint. The county attorney of any county in which a violation occurs shall, upon the written request of
the commissioner or the attorney general, prosecute the violation.
B. In addition to all other remedies, when it appears to the commissioner either upon complaint or
otherwise that any person, firm, partnership, corporation, association or other organization, or a
combination of any of them, has engaged or is engaging in any act, practice or transaction which
constitutes a violation of this chapter or of any rule or order of the commissioner, the commissioner may,
either through the attorney general or through the county attorney of any county in which the act, practice
or transaction is alleged to have been committed, apply to the superior court of that county for an
injunction restraining such person, firm, partnership, corporation, association or other organization from
engaging in such act, practice or transaction, or doing any act in furtherance thereof, and, upon a proper
showing, a temporary restraining order, a preliminary injunction or a permanent injunction shall be
granted without bond. Process in such action may be served upon the defendant in any county of this
state where such defendant transacts business or is found or on the statutory agent in the case of a
corporation.
C. Nothing in subsection B shall give the department jurisdiction over any landlord and tenant disputes or
federal or state fair housing violations or authorize the commissioner to seek sanctions under this chapter
or any rule or order of the commissioner relating to these matters.
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 section 441522 with respect to the sale or lease of either 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 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.
32-2161. False statements or publications concerning land, subdivision or membership camping
contract for sale or lease; classification; definition
A. Every person who knowingly authorizes or directs any publication or any false statement or
representation concerning any land, subdivision or membership camping contract offered for sale or
lease, and every person who, with knowledge that any advertisement, pamphlet, prospectus, or letter
concerning the land, subdivision or membership camping contract contains any written statement that is
false or fraudulent, issues, circulates, publishes or distributes it or causes it to be issued, circulated,
published or distributed, or who in any respect knowingly violates or fails to comply with any order, permit,
decision, demand or requirement of the commissioner under the provisions of this chapter, is guilty of a
class 6 felony and, if a licensee, shall be tried before the commissioner for suspension or revocation of
his license.
B. For purposes of this section, "knowingly" or "with knowledge" includes, but is not limited to, engaging in
any conduct prohibited in subsection A if such person knew or should have known of the falsity of any
statement or representation.

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32-2162. Sale of cemetery property for speculation unlawful
It is unlawful for any person to sell or offer for sale cemetery property under any promise that the
cemetery property sold or offered for sale may be resold at a profit. The conveyance of cemetery property
pursuant to a sale in violation of this section is void.
32-2163. Unlawful acts; out-of-state broker; cooperation agreement
A. It is unlawful for any licensed broker in this state to employ or compensate, directly or indirectly, any
person for performing any of the acts within the scope of this chapter if the person is not also a licensed
broker in this state, or a salesperson licensed under the broker employing or compensating him, except
that a licensed broker in this state may pay compensation to and receive compensation from a broker
lawfully operating in another state.
B. Notwithstanding that pursuant to subsection A of this section a licensed broker in this state may pay to
and receive compensation from an out-of-state broker, this authority shall not be construed to permit an
out-of-state broker to conduct activity in this state that would otherwise require a broker's license issued
by the department.
C. A licensed broker in this state may cooperate with an out-of-state broker who would otherwise require
licensure in this state if:
1. The licensed broker and the out-of-state broker enter into a written cooperation agreement
before the out-of-state broker conducts any activity otherwise requiring a broker's license
pursuant to this chapter. The cooperation agreement shall include the following:
(a) A list of the real estate activities to be conducted by the out-of-state broker.
(b) A statement that the out-of-state broker agrees to fully comply with the laws of this
state and submit to the regulatory jurisdiction of the department for activities subject to
real estate broker licensure pursuant to this chapter.
(c) A statement that the licensed broker in this state understands and accepts
responsibility for the acts of the out-of-state broker.
2. All negotiations in this state or with people who own property in this state are conducted
through the licensed broker in this state.
3. The licensed broker in this state assumes all responsibility for the acts of the out-of-state
broker.
4. All principal funds handled by either the licensed broker in this state or the out-of-state broker
are subject to the deposit and handling requirements of section 32-2151.
D. The offering of real estate brokerage services specified by section 32-2101, paragraph 48 for
compensation or any other thing of value pertaining to real property located in this state through an
internet web site constitutes activity that requires a broker's license issued by the department.
E. This section does not allow an out-of-state broker who is not licensed in this state to list, market or
advertise in this state real property located in this state for sale, lease or exchange.
F. Signs shall not be placed on real property in this state by an out-of-state broker. An out-of-state broker
shall not use a cooperation agreement as authority to sell, lease, rent, exchange or attempt to sell, lease,
rent or exchange real property to a resident of this state.
32-2164. Unlawful subdivision lot sales
It is unlawful for a licensed real estate broker or salesperson to assist a subdivider or agent of such
subdivider in the offer, sale or lease of a subdivision lot or parcel in violation of any provision of this
chapter or any rule adopted or order issued by the commissioner if the licensee knew or should have
known of the violation.
32-2165. Unlicensed activities; violation; classification
A. A person who acts as a broker or salesperson within the meaning of this chapter, or who advertises in
a manner that indicates that the person is licensed as a broker or salesperson, without being licensed as
prescribed by this chapter is guilty of a class 6 felony.
B. A person who performs acts that require a license under this chapter, other than a broker's or
salesperson's license, without being licensed as prescribed by this chapter is guilty of a class 5 felony.
C. The penalties prescribed by this section do not apply to:

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1. A broker or salesperson within a year of the expiration of the broker's or salesperson's license,
if the failure to timely renew the license was due to unintentional neglect by the licensee or
administrative untimeliness by the department.
2. The activities of a licensee, while acting in a capacity for which the person's license was
issued, that otherwise violate any provision of this chapter.
3. Any person who, on discovering that a license is required to carry on the person's present or
planned activities, and before the issuance of a cease and desist order pursuant to section 322154, notifies the department of the person's intent to immediately comply with this chapter,
applies for the required license and ceases the prohibited activities pending issuance of a license.
Nothing in this paragraph shall be construed to lessen or reduce the qualifications otherwise
required of license applicants under this chapter or to diminish the authority of the department to
deny a license to a person who does not meet all of the requirements for licensure.
32-2166. Activities while incarcerated; violation; classification
A. While incarcerated a person who is licensed pursuant to this chapter shall not perform acts that require
a license under this chapter.
B. A person who violates this section is guilty of a class 6 felony.

Article 3.1 Property Management
32-2171. Definitions
In this article, unless the context otherwise requires:
1. "Property management firm" means any corporation, partnership or limited liability company
licensed pursuant to section 32-2125, subsection A or a designated broker that by written
agreement, manages rental property or properties for compensation.
2. "Rental agreement" means a lease or leasing agreement.
32-2172. Scope of article
This article supersedes all provisions of law and rules that relate to property management.
32-2173. Property management agreements; contents, termination
A. A property management firm shall write property management agreements in clear, unambiguous
language, and the property management agreements:
1. Shall:
(a) State all material terms and conditions of the property management firm's services,
obligations, duties and responsibilities to the property owner.
(b) Be signed by the property owner or his agent and the property management firm's
designated broker or the broker's authorized real estate licensee.
(c) Specify a beginning and an ending date.
(d) Contain cancellation provisions that are agreeable to both parties.
(e) Provide for the manner of disposition of all monies collected by the property
management firm, including any tenant deposits.
(f) Specify the type and frequency of status reports to the owner.
(g) State the amount and purpose of monies the property management firm holds as an
operating reserve for emergency and other purposes.
(h) Provide for the disposition and allocation of interest earned on trust account monies.
(i) State the terms and conditions of compensation the property owner pays for services
pursuant to the property management agreement.
(j) Not be assigned to another licensee or licensed entity without the express written
consent of the property owner.
2. May:
(a) Contain an automatic renewal provision, if the property management firm sends the
owner a reminder notice at least thirty days before the renewal date. The notice does not
negate any other cancellation term otherwise agreed to.
(b) Provide for reasonable liquidated damages or cancellation fees for early termination
of the agreement.
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(c) Allow the property management firm's broker to authorize a licensed or unlicensed
person in the direct employment of the broker, pursuant to section 32-2174, subsection
C, to transfer monies from or to be a signatory on a property management trust account
to which the property management firm deposits the owner's monies.
(d) Require more than one signature on checks written from a property management
account.
(e) Contain any other provisions that are agreed to between the property management
firm and the owner and that are not in conflict with the requirements of this chapter.
B. Immediately on termination of a property management agreement, the property management firm shall
provide the owner with:
1. All originals or other copies of all rental agreements or related documents in the property
management firm's possession for current and previous tenants. These documents shall include
any applications, property inventories, leases, pet permits, default notices, lease amendments or
addenda in the property management firm's possession. The broker is not required to keep
copies of residential rental lease agreements or related rental lease documents after termination
of the property management agreement.
2. All building plans, environmental studies, conditions, covenants and restrictions, inspection
reports, contracts, keys, warranties, personal property or other documents in the possession of
the property management firm.
C. On termination of the property management agreement the property management firm shall provide
the owner with a final accounting of the property's financial status that includes at a minimum:
1. Within five days, a list of all tenant security obligations.
2. Within thirty-five days, reimbursement for all monies remaining in the property accounts
maintained by the property management firm, except for monies needed for unpaid obligations
incurred during the term of the property management agreement.
3. Within seventy-five days, a final accounts receivable and payable list.
4. Within seventy-five days, a final bank account reconciliation.
D. If there is an on-site management office and any of the records or documents described in subsection
B of this section are located on site, the property management firm may leave the items there for the
benefit of the owner on termination of the property management agreement. The property management
firm shall inform the owner in writing immediately as to the location of these records.
32-2174. Property management accounts
A. All property management accounts shall be designated as trust accounts and shall include descriptive
wording, substantially similar to one of the following, in the trust account title:
1. "Trust account".
2. "Fiduciary account".
3. "In trust for (individual or entity name)".
4. "Trustee for (individual or entity name)".
5. "Fiduciary for (individual or entity name)".
B. A broker's trust account is required for all of the owner's monies, except if the owner directs the broker
to deposit the monies directly into the owner's account. The broker shall not have access to the owner's
account. Trust accounts may be interest bearing.
C. The designated broker for a property management firm may authorize either a licensee or an
unlicensed natural person in the direct employ of the broker to transfer monies or to be a signatory on the
property management firm's trust accounts. If the person who is designated to sign on behalf of the
designated property management broker is an unlicensed person, that person shall be a bona fide officer,
member, principal or employee of the property management firm. The broker may require dual signatures
on checks and may use a facsimile signature according to the broker's business policies and procedures.
The designation of a licensed or unlicensed person to transfer monies or to be a signatory on trust
accounts does not lessen the broker's responsibility or liability for any monies handled.
D. Within three banking days after receiving monies that are not subject to dispute or contingency, the
property management firm shall deposit the monies in either the owner's direct account or the property
management firm's trust account for the benefit of the owner. A property management firm may remit an
owner's monies under its control to or for the owner by any lawful means available.

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E. Each rental agreement executed by a property manager shall include a provision that clearly states the
disposition of any tenant deposits.
32-2175. Property management records; requirements; audits
A. Property management firms shall keep a residential rental agreement and related residential rental
agreement documents for one year from the expiration of the rental agreement or until the rental
agreement and related documents are given to the owner at the termination of any property management
agreement. The records shall be kept at the broker's main office or at an off-site storage location in this
state if the broker provides prior written notification of the street address of the off-site storage location to
the department.
B. Property management firms shall keep records of all finder fees that are paid to tenants for three years
after the payment is made or until the records are given to the owner at the termination of the property
management agreement. Records shall be kept at the broker's main office or at an off-site storage
location in this state if the broker provides prior written notification of the street address of the off-site
storage location to the department.
C. Property management firms shall keep all financial records pertaining to clients for at least three years
from the date each document was executed, including bank statements, canceled checks or bank
generated check images, deposit slips, bank receipts, receipts and disbursement journals, owner
statements, client ledgers and applicable bills, invoices and statements.
D. Only the designated broker or the broker's authorized real estate licensee, on behalf of the broker, may
sign nonresidential rental agreements. The broker shall execute in writing and shall file any delegation of
authority in the broker's employee file. Fully executed residential lease agreements are not required to be
reviewed and initialed.
E. The property management firms shall consecutively number or file all signed property management
agreements in compliance with a system that is orderly, easily accessible by the commissioner or the
commissioner's representative and consistent with generally accepted professional standards of the
industry for that type of real estate.
F. Property management firms shall maintain each nonresidential real estate lease agreement and the
transaction folder in which it is kept in a chronological log or other systematic manner that is easily
accessible by the commissioner or the commissioner's representatives. For nonresidential lease
transactions, transaction folders shall contain:
1. Confirmation that the deposits or other monies that were handled by or through the broker
were handled according to instructions given by or agreed on by the parties to the transaction.
2. A complete copy of the nonresidential lease or rental agreement.
3. If applicable, a copy of the listing agreement.
G. Property management firms shall number on-site residential rental transaction folders according to
dwelling unit number or other systematic manner that is easily accessible by the commissioner or the
commissioner's representative. A broker is not required to maintain duplicate residential rental
transaction folders.
H. On request by the commissioner or the commissioner's representatives for routine audit purposes the
broker shall make available within a reasonable amount of time all records relative to property
management accounts, including lease agreements, lease related documents and trust account records.
The department is limited to auditing those areas that are related to the business activities of a broker and
that have a material bearing on the accuracy of the audit. This subsection shall not limit the immediacy or
scope of an audit if a violation of real estate statutes or rules is suspected.
32-2176. Payment of finder fees to apartment tenants; limits; prohibited activities; civil penalty;
definitions
A. Notwithstanding sections 32-2155, 32-2163 and 32-2165 or any other provision of this chapter, a
property management firm or a property owner may:
1. Pay a finder fee to an unlicensed person who is a tenant in an apartment complex managed by
the firm or owned by the owner.
2. Authorize a residential leasing agent or manager to deliver a finder fee to an unlicensed person
who is a tenant in an apartment complex managed by the residential leasing agent or manager. A
residential leasing agent or manager may not receive a finder fee. This prohibition does not affect

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the ability of a residential leasing agent or manager to receive a bonus pursuant to section 322121, subsection A, paragraph 6.
B. A finder fee paid pursuant to this section shall be a credit toward or reduction in the tenant's monthly
rent. A tenant may receive multiple finder fees.
C. A tenant shall limit the tenant's activities pursuant to this section to referring prospective lessees to the
owner or the owner's agent and shall not do any of the following:
1. Show a residential dwelling unit to a prospective lessee.
2. Discuss terms or conditions of leasing a dwelling unit with a prospective lessee.
3. Participate in the negotiation of the leasing of a dwelling unit.
D. This section does not allow an unlicensed person to advertise or otherwise promote the person's
services in procuring or assisting to procure prospective lessors or tenants of apartment units.
E. For a licensee who pays a finder fee in violation of this section, for each violation the department may
suspend or revoke the licensee's license or impose a civil penalty pursuant to section 32-2153.
F. For the purposes of this section:
1. "Finder fee" means a fee paid to a person for introducing or arranging an introduction between
the parties to a transaction involving the rental of an apartment unit.
2. "Property owner" means a person who is exempt from the licensing requirements of this
chapter pursuant to section 32-2121, subsection A, paragraph 1.
3. "Residential leasing agent or manager" has the same meaning prescribed in section 32-2121,
subsection A, paragraph 6.

Article 4 Sale of Subdivided Lands
32-2181; Notice to commissioner of intention to subdivide lands; unlawful acting in concert;
exceptions; deed restrictions; definition
A. Before offering subdivided lands for sale or lease, the subdivider shall notify the commissioner in
writing of the subdivider's intention. The notice shall contain:
1. The name and address of the owner. If the holder of any ownership interest in the land is other
than an individual, such as a corporation, partnership or trust, a statement naming the type of
legal entity and listing the interest and the extent of any interest of each principal in the entity. For
the purposes of this section, "principal" means any person or entity having a ten per cent or more
financial interest or, if the legal entity is a trust, each beneficiary of the trust holding a ten per cent
or more beneficial interest.
2. The name and address of the subdivider.
3. The legal description and area of the land.
4. A true statement of the condition of the title to the land, including all encumbrances on the land,
and a statement of the provisions agreed to by the holder of any blanket encumbrance enabling a
purchaser to acquire title to a lot or parcel free of the lien of the blanket encumbrance on
completion of all payments and performance of all of the terms and provisions required to be
made or performed by the purchaser under the real estate sales contract by which the purchaser
has acquired the lot or parcel. The subdivider shall file copies of documents acceptable to the
department containing these provisions with the commissioner before the sale of any subdivision
lot or parcel subject to a blanket encumbrance.
5. The terms and conditions on which it is intended to dispose of the land, together with copies of
any real estate sales contract, conveyance, lease, assignment or other instrument intended to be
used, and any other information the owner or the owner's agent or subdivider desires to present.
6. A map of the subdivision that has been filed in the office of the county recorder in the county in
which the subdivision is located.
7. A brief but comprehensive statement describing the land on and the locality in which the
subdivision is located.
8. A statement of the provisions that have been made for permanent access and provisions, if
any, for health department approved sewage and solid waste collection and disposal and public
utilities in the proposed subdivision, including water, electricity, gas and telephone facilities.
9. A statement as to the location of the nearest public common and high schools available for the
attendance of school age pupils residing on the subdivision property.
10. A statement of the use or uses for which the proposed subdivision will be offered.
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11. A statement of the provisions, if any, limiting the use or occupancy of the parcels in the
subdivision, together with copies of any restrictive covenants affecting all or part of the
subdivision.
12. The name and business address of the principal broker selling or leasing, within this state,
lots or parcels in the subdivision.
13. A true statement of the approximate amount of indebtedness that is a lien on the subdivision
or any part of the subdivision and that was incurred to pay for the construction of any on-site or
off-site improvement, or any community or recreational facility.
14. A true statement or reasonable estimate, if applicable, of the amount of any indebtedness that
has been or is proposed to be incurred by an existing or proposed special district, entity, taxing
area or assessment district, within the boundaries of which the subdivision, or any part of the
subdivision, is located, and that is to pay for the construction or installation of any improvement or
to furnish community or recreational facilities to the subdivision, and which amounts are to be
obtained by ad valorem tax or assessment, or by a special assessment or tax upon the
subdivision or any part of the subdivision.
15. A true statement as to the approximate amount of annual taxes, special assessments or fees
to be paid by the buyer for the proposed annual maintenance of common facilities in the
subdivision.
16. A statement of the provisions for easements for permanent access for irrigation water where
applicable.
17. A true statement of assurances for the completion of off-site improvements, such as roads,
utilities, community or recreational facilities and other improvements to be included in the offering
or represented as being in the offering, and approval of the offering by the political subdivision
with authority. This statement shall include a trust agreement or any other evidence of
assurances for delivery of the improvements and a statement of the provisions, if any, for the
continued maintenance of the improvements.
18. A true statement of the nature of any improvements to be installed by the subdivider, the
estimated schedule for completion and the estimated costs related to the improvements that will
be borne by purchasers of lots in the subdivision.
19. A true statement of the availability of sewage disposal facilities and other public utilities,
including water, electricity, gas and telephone facilities in the subdivision, the estimated schedule
for their installation, and the estimated costs related to the facilities and utilities that will be borne
by purchasers of lots in the subdivision.
20. A true statement as to whether all or any portion of the subdivision is located in an open
range or area in which livestock may roam at large under the laws of this state and what
provisions, if any, have been made for the fencing of the subdivision to preclude livestock from
roaming within the subdivided lands.
21. If the subdivider is a subsidiary corporation, a true statement identifying the parent
corporation and any of the following in which the parent or any of its subsidiaries is or has been
involved within the past five years:
(a) Any subdivision in this state.
(b) Any subdivision, wherever located, for which registration is required pursuant to the
federal interstate land sales full disclosure act.
(c) Any subdivision, wherever located, for which registration would have been required
pursuant to the federal interstate land sales full disclosure act but for the exemption for
subdivisions whose lots are all twenty acres or more in size.
22. A true statement identifying all other subdivisions, designated in paragraph 21 of this
subsection, in which any of the following is or, within the last five years, has been directly or
indirectly involved:
(a) The holder of any ownership interest in the land.
(b) The subdivider.
(c) Any principal or officer in the holder or subdivider.
23. A true statement as to whether all or any portion of the subdivision is located in territory in the
vicinity of a military airport or ancillary military facility as defined in section 28-8461, in territory in
the vicinity of a public airport as defined in section 28-8486, on or after July 1, 2001, in a high
noise or accident potential zone as defined in section 28-8461 or on or after July 1 of the year in
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which the subdivision becomes located in a high noise or accident potential zone. The statement
required pursuant to this paragraph does not require the amendment or refiling of any notice filed
before July 1, 2001 or before July 1 of the year in which the subdivision becomes located in a
high noise or accident potential zone.
24. If the subdivision is a conversion from multifamily rental to condominiums as defined in
section 33-1202, a true statement as to the following:
(a) That the property is a conversion from multifamily rental to condominiums.
(b) The date original construction was completed.
25. Other information and documents and certifications as the commissioner may reasonably
require provided that the subdivider shall not be required to disclose any critical infrastructure
information as defined in section 41-1801 or any information contained in a report issued
pursuant to section 41-4273.
B. The commissioner, on application, may grant a subdivider of lots or parcels within a subdivision for
which a public report was previously issued by the commissioner an exemption from all or part of the
notification requirements of subsection A of this section. The subdivider shall file a statement with the
commissioner indicating the change of ownership in the lots or parcels together with any material
changes occurring subsequent to the original approval of the subdivision within which the lots or parcels
are located. The statement shall further refer to the original approval by the commissioner.
C. If the subdivision is within an active management area, as defined in section 45-402, the subdivider
shall accompany the notice with a certificate of assured water supply issued by the director of water
resources along with proof that all applicable fees have been paid pursuant to sections 48-3772 and 483774.01, unless the subdivider has obtained a written commitment of water service for the subdivision
from a city, town or private water company designated as having an assured water supply by the director
of water resources pursuant to section 45-576 or is exempt from the requirement pursuant to section 45576. If the subdivider has submitted a certificate of assured water supply to a city, town or county prior to
approval of the plat by the city, town or county and this has been noted on the face of the plat, the
submission constitutes compliance with this subsection if the subdivider provides proof to the
commissioner that all applicable fees have been paid pursuant to sections 48-3772 and 48-3774.01.
D. It is unlawful for a person or group of persons acting in concert to attempt to avoid this article by acting
in concert to divide a parcel of land or sell subdivision lots by using a series of owners or conveyances or
by any other method that ultimately results in the division of the lands into a subdivision or the sale of
subdivided land. The plan or offering is subject to this article. Unlawful acting in concert pursuant to this
subsection with respect to the sale or lease of subdivision lots requires proof that the real estate licensee
or other licensed professional knew or with the exercise of reasonable diligence should have known that
property which the licensee listed or for which the licensee acted in any capacity as agent was subdivided
land subject to this article. A familial relationship alone is not sufficient to constitute unlawful acting in
concert.
E. A creation of six or more lots, parcels or fractional interests in improved or unimproved land, lots or
parcels of any size is subject to this article except when:
1. Each of the lots, parcels or fractional interests represents, on a partition basis, thirty-six acres
or more in area of land located in this state, including to the centerline of dedicated roads or
easements, if any, contiguous to the land in which the interests are held.
2. The lots, parcels or fractional interests are the result of a foreclosure sale, the exercise by a
trustee under a deed of trust of a power of sale or the grant of a deed in lieu of foreclosure. This
paragraph does not allow circumvention of the requirements of this article.
3. The lots, parcels or fractional interests are created by a valid order or decree of a court
pursuant to and through compliance with title 12, chapter 8, article 7 or by operation of law. This
paragraph does not allow circumvention of the requirements of this article.
4. The lots, parcels or fractional interests consist of interests in any oil, gas or mineral lease,
permit, claim or right therein and such interests are regulated as securities by the United States
or by this state.
5. The lots, parcels or fractional interests are registered as securities under the laws of the United
States or the laws of this state or are exempt transactions under section 44-1844, 44-1845 or 441846.
6. The commissioner by special order exempts offerings or dispositions of any lots, parcels or
fractional interests from compliance with this article on written petition and on a showing
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satisfactory to the commissioner that compliance is not essential to the public interest or for the
protection of buyers.
7. A sale or lease of a lot, parcel or fractional interest occurs ten or more years after the sale or
lease of another lot, parcel or fractional interest and the other lot, parcel or fractional interest is
not subject to this article and is treated as an independent parcel unless, upon investigation by
the commissioner, there is evidence of intent to subdivide.
F. In areas outside of active management areas established pursuant to title 45, chapter 2, article 2:
1. If the subdivision is located in a county that has adopted the provision authorized by section
11-823, subsection A, or in a city or town that has enacted an ordinance pursuant to section 9463.01, subsection O, the subdivider shall accompany the notice with a report issued by the
director of water resources pursuant to section 45-108 stating that the subdivision has an
adequate water supply, unless one of the following applies:
(a) The subdivider submitted the report to a city, town or county before approval of the
plat by the city, town or county and this has been noted on the face of the plat.
(b) The subdivider has obtained a written commitment of water service for the subdivision
from a city, town or private water company designated as having an adequate water
supply by the director of water resources pursuant to section 45-108.
(c) The plat was approved pursuant to an exemption authorized by section 9-463.01,
subsection K, pursuant to an exemption authorized by section 11-823, subsection B,
paragraph 1, pursuant to an exemption granted by the director of water resources under
section 45-108.02 and the exemption has not expired or pursuant to an exemption
granted by the director under section 45-108.03. If the plat was approved pursuant to an
authorized exemption, the state real estate commissioner shall require that all
promotional material and contracts for the sale of lots in the subdivision adequately
display the following:
(i) The director of water resources' report or the developer's brief summary of the
report as approved by the commissioner on the proposed water supply for the
subdivision.
(ii) A statement describing the exemption under which the subdivision was
approved, including the specific conditions of the exemption that were met. If the
plat was approved by the legislative body of a city or town pursuant to an
exemption authorized by section 9-463.01, subsection K or by the board of
supervisors of a county pursuant to an exemption authorized by section 11-823,
subsection B, paragraph 1, the subdivider shall record the document required by
section 33-406.
(d) The subdivision received final plat approval from the city, town or county before the
requirement for an adequate water supply became effective in the city, town or county,
and there have been no material changes to the plat since the final plat approval. If
changes were made to the plat after the final plat approval, the director of water
resources shall determine whether the changes are material pursuant to the rules
adopted by the director to implement section 45-108. If this subdivision applies, the state
real estate commissioner shall require that all promotional materials and contracts for the
sale of lots in the subdivision adequately display the director of water resources' report or
the developer's brief summary of the report as approved by the commissioner on the
proposed water supply for the subdivision.
2. If the subdivision is not located in a county that has adopted the provision authorized by
section 11-823, subsection A or in a city or town that has enacted an ordinance pursuant to
section 9-463.01, subsection O, and if the director of water resources, pursuant to section 45108, reports an inadequate on-site supply of water to meet the needs projected by the developer
or if no water is available, the state real estate commissioner shall require that all promotional
material and contracts for the sale of lots in subdivisions approved by the commissioner
adequately display the director of water resources' report or the developer's brief summary of the
report as approved by the commissioner on the proposed water supply for the subdivision.
G. The commissioner may require the subdivider to supplement the notice of intention to subdivide lands
and may require the filing of periodic reports to update the information contained in the original notice of
intention to subdivide lands.
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H. The commissioner may authorize the subdivider to file as the notice of intention to subdivide lands, in
lieu of some or all of the requirements of subsection A of this section, a copy of the statement of record
filed with respect to the subdivision pursuant to the federal interstate land sales full disclosure act if the
statement complies with the requirements of the act and the regulations pertinent to the act.
I. Neither a real estate sales contract, conveyance, lease, assignment or other instrument to transfer any
interest in subdivided land nor any covenant or restriction affecting real property shall contain any
provision limiting the right of any party to appear or testify in support of or opposition to zoning changes,
building permits or any other official acts affecting real property before a governmental body or official
considering zoning changes, building permits or any other official acts affecting real property, whether the
property is located within or outside of the boundaries of the subdivision. All contractual provisions that
conflict with this subsection are declared to be contrary to public policy. Nothing contained in this
subsection shall prohibit private restrictions on the use of any real property.
J. Before offering subdivided lands for lease or sale, the subdivider who makes any promises through any
form of advertising media that the subdivided lands will be exclusively a retirement community or one that
is limited to the residency of adults or senior citizens shall include the promises in the deed restrictions
affecting any interest in real property within the subdivided lands.
K. Except as otherwise provided in this section, a subdivider shall not be required to disclose items that
are over one mile from the subdivision boundaries. The existence of foreign nations or tribal lands shall
also be disclosed if located within the one mile radius of the subdivision boundaries.
32-2181.01. Power of commissioner to exempt certain subdivisions or fractional interests by
special order
A. The commissioner may in his discretion by special order exempt from any one or all of the provisions
of this article certain subdivided lands or fractional interests therein upon written petition and upon a
showing by the petitioner, satisfactory to the commissioner, that compliance with the provisions of this
article is not essential to the public interest or for the protection of buyers by reason of the special
characteristics of the subdivided lands or fractional interests therein or the limited character and duration
of the offer for sale, lease or financing or the special characteristics or limited number of fractional
interests.
B. Special orders issued pursuant to this section shall relate to specific lands or specific fractional
interests.
C. A petition filed under this section shall be accompanied by an initial fee of one hundred dollars. No
fees shall be returnable irrespective of the nature of the action upon the petition.
32-2181.02. Exempt sales and leases
A. The following are exempt under this article:
1. The sale or lease in bulk of six or more lots, parcels or fractional interests to one buyer in one
transaction.
2. The sale or lease of lots or parcels of one hundred sixty acres or more.
B. The following are exempt from section 32-2181, subsection A and section 32-2183, subsection A:
1. The sale or lease of parcels, lots, units or spaces that are zoned and restricted to commercial
or industrial uses.
2. The sale or lease of lots or parcels located in a single platted subdivision by a subdivider if:
(a) A public report has been issued within the past five years pursuant to this article on
the subdivision lots or parcels.
(b) The subdivision meets all current requirements otherwise required of a subdivision
under this article.
(c) The method of sale or lease of lots or parcels meets all current requirements under
this article.
(d) The lots or parcels are included on a recorded subdivision plat that is approved by a
municipal or county government.
(e) All roads within the subdivision, all utilities to the lots or parcels being offered for sale
or lease and all other required improvements within the subdivision, other than a
residence to be built, are complete, paid for and free of any blanket encumbrances.
(f) The roads, utilities or other improvements are not complete, but the completion of all
improvements is assured pursuant to section 32-2183, subsection F.
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(g) Except for matters relating to ownership and financing, there have been no material
changes to the information set forth in the most recent public report issued for the
subdivision lots that would require an amendment to the public report.
(h) No owner of a ten per cent or greater interest, subdivider, director, partner, agent,
officer or developer of the subdivision has:
(i) Been convicted of a felony or any crime involving theft, dishonesty, violence
against another person, fraud or real estate, regardless of whether the
convictions were subsequently expunged.
(ii) Had a civil judgment entered against the person in a case involving
allegations of misrepresentation, fraud, breach of fiduciary duty,
misappropriation, dishonesty or, if the subject matter involved real property,
securities or investments.
(iii) Had a business or professional license, including a real estate license,
denied, suspended or revoked or voluntarily surrendered a business or
professional license during the course of an investigative or disciplinary
proceeding or other disciplinary action taken in this state or any other state.
(i) The sale of the subdivided lands violates no laws or ordinances of any governmental
authority.
(j) Before the buyer's or lessee's execution of a purchase contract or lease, the
subdivider has provided the buyer or lessee with a copy of the most recent public report
on the lot and has taken a receipt from the buyer for the copy.
(k) The subdivider has provided to the buyer or lessee, along with the public report, a
signed statement that the subdivider has reviewed and is in compliance with the terms of
the exemption provided in this paragraph.
(l) Before sale or lease, the subdivider has notified the commissioner, on a form provided
by the department, of the subdivider's intent to sell or lease lots or parcels pursuant to
this paragraph. The notice shall include:
(i) The name, address and telephone number of the subdivider.
(ii) The name, address and telephone number of any real estate broker retained
by the subdivider to make sales or leases of the lots.
(iii) The name and location of the subdivision.
(iv) The most recent subdivision public report reference number on the lots.
(v) The completion status of subdivision improvements.
3. The conveyance to a person who previously conveyed the lot to a home builder for the purpose
of constructing a dwelling for the person.
4. The sale or lease by a person of individual lots or parcels that were separately acquired by the
person from different persons and that were not acquired for the purpose of development if:
(a) The lots or parcels are not located in a platted subdivision.
(b) Each lot or parcel bears the same legal description that it bore when the lot or parcel
was acquired by the person.
(c) The seller or lessor is in compliance with all other applicable state and local
government requirements.
5. The sale of an improved lot in a subdivision that is located outside of this state if:
(a) The subdivision is located within the United States and the sale is exempt from the
interstate land sales full disclosure act (P.L. 90-448; 82 Stat. 590; 15 United States Code
sections 1701 through 1720).
(b) The subdivider is required by the state where the subdivision is located to deliver a
public report or equivalent disclosure document to prospective purchasers and the
subdivider delivers the report or equivalent disclosure document.
6. The sale of an improved lot in a subdivision located in this state where five or more sales were
previously made by the seller if:
(a) The sale is the seller's first or second sale in the subdivision within the previous
twelve month period.
(b) The subdivision is located within the corporate limits of a town or city.
(c) Electricity and telephone service are complete and available to the improved lot.
(d) Water and sewage service is complete and available to the improved lot.
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(e) Streets and roads located outside of the subdivision provide permanent access to the
subdivision and are complete and maintained by the county, town or city, or by a legally
created and operational property owners' association.
(f) Streets within the subdivision are dedicated, provide permanent access to the lot, are
complete to town or city standards and are maintained by the town or city or, in the case
of private streets, a legally created and operational property owners' association accepts
the responsibility of perpetual maintenance.
(g) All subdivision common area improvements, including landscaping, recreational
facilities and other jointly used and maintained improvements, are complete and
maintained by a legally created and operational property owners' association.
(h) The purchaser's down payment, earnest money, deposit or other advanced money is
placed and held in a neutral escrow depository in this state until escrow closes and the
deed is delivered to the purchaser.
(i) Within the previous twelve months the seller has not had an ownership interest in more
than two lots in the subdivision, including an interest by option, an agreement for sale, a
beneficial interest under a trust or a purchase contract.
C. Nothing in this section shall be construed to increase, decrease or otherwise affect any rights or
powers granted the commissioner under this chapter.
D. This section does not apply to lands on which the commissioner has issued orders pursuant to
sections 32-2154 and 32-2157 and section 32-2183, subsection M unless the commissioner has issued a
public report on those lands subsequent to the date of the orders.
E. Nothing in this section shall be construed to increase, to decrease or to otherwise affect any rights or
powers granted to political subdivisions of this state with respect to their jurisdictions.
32-2181.03. Lot reservations; expiration
A. The notice of intent required by section 32-2181, subsection A or section 32-2195, subsection B and
the issuance of a public report required by section 32-2183, subsection A or section 32-2195.03,
subsection A are not required for any party to enter into a lot reservation on property located in this state.
B. Before the issuance of a public report, a deposit may be accepted from a prospective buyer as a lot
reservation if all of the following requirements are met:
1. Before accepting any lot reservation, the prospective seller shall mail or deliver written notice of
the seller's intention to accept lot reservations to the department. The notice shall include:
(a) The name, address and telephone number of the prospective seller.
(b) The name, address and telephone number of any real estate broker retained by the
prospective seller to promote the lot reservation program.
(c) The name and location of the project for which lot reservations are to be offered.
(d) The form to be used for accepting lot reservations, subject to approval by the
commissioner.
2. The reservation deposit for a single lot or parcel shall not exceed five thousand dollars.
3. Within one business day after a reservation is accepted by the prospective seller, the
reservation deposit shall be delivered to an escrow agent licensed pursuant to title 6, chapter 7
and deposited by the escrow agent in a depository insured by an agency of the United States.
The escrow account may be interest bearing at the direction of either the prospective seller or
prospective buyer. Payment of any account fees and payment of interest monies shall be as
agreed to between the prospective buyer and prospective seller. All reservation deposits shall
remain in an escrow account until cancellation or termination of the lot reservation or execution of
a purchase contract.
4. Within fifteen calendar days of receipt by the prospective seller of the public report issued by
the commissioner relative to the reserved lot or parcel, the prospective seller shall provide the
prospective buyer with a copy of the public report and a copy of the proposed purchase contract
for the sale of the lot or parcel. The prospective buyer and prospective seller have seven
business days after the prospective buyer's receipt of the public report and the proposed
purchase contract within which to enter into a contract for the purchase of the lot or parcel. If the
prospective buyer and prospective seller do not enter into a contract for the purchase of the lot or
parcel within the seven business day period, the reservation automatically terminates. The
prospective seller has no cancellation rights other than as provided in this paragraph.
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5. A prospective buyer may cancel a lot reservation at any time before the execution of a
purchase contract by delivering written notice of termination to the prospective seller.
6. Within five business days after a lot reservation has been terminated for any reason, the
prospective seller shall refund to the prospective buyer all reservation deposits made by the
prospective buyer including any interest monies earned less any account fees agreed upon, if
applicable. The escrow agent shall refund to the prospective buyer all reservation deposits made
by the prospective buyer including any interest monies earned less any account fees agreed
upon if the prospective seller is not available. After this refund neither the prospective buyer nor
the prospective seller has any obligation to the other arising out of the lot reservation.
7. A prospective buyer may not transfer rights under a reservation without the prior written
consent of the prospective seller, and any purported transfer without the consent of the
prospective seller is voidable at the sole discretion of the prospective seller.
8. If the department denies an application for a public report on the development on which lot
reservations were taken, within five business days of notification by the department, the
prospective seller shall notify in writing each prospective buyer who entered into a lot reservation
agreement. The prospective seller shall return any reservation deposits previously taken.
9. All notices required by this section to be given to the department, the prospective buyer or the
prospective seller shall be in writing and either hand delivered or sent by certified mail, return
receipt requested, with postage fully prepaid. Notices sent by mail are deemed delivered on the
earlier of actual receipt, as evidenced by the delivery receipt, or seven calendar days after being
deposited in the United States mail.
10. Each lot reservation form shall contain the following statement:
The state real estate department has not inspected or approved this project and no public report
has yet been issued for the project. No offer to sell may be made and no offer to purchase may
be accepted before issuance of a public report for the project.
C. The commissioner may deny authorization to accept lot reservations under this section to any person
who has violated or is in violation of any provision of this chapter.
D. The authority to take lot reservations under this section expires two years after the date the
commissioner receives notice of the intent to take lot reservations from a developer.
32-2182. Examination of subdivision by commissioner; fee; time limit to determine violation
A. The commissioner shall examine any subdivision offered for sale or lease and shall make public his
findings. The total cost of travel and subsistence expenses incurred by the department in the
examination, in addition to the initial filing fee provided for in this section, shall be borne by the subdivider
on the basis of actual cost to the department. A filing fee of five hundred dollars or such lesser fee as
determined by the commissioner shall accompany the written notification required in section 32-2181.
The commissioner may allow the developer to outsource and pay for the cost of physical inspections so
long as the department approves the inspector and the inspection for content.
B. The commissioner may, but is not required to, inspect a subdivision site if all of the following apply:
1. The commissioner has previously inspected the subdivision within the past two years.
2. All proposed improvements were complete at the time of the previous inspection.
3. The sales offering does not include any changes to the physical aspects of the subdivision,
including the plat, site and locations of improvements.
C. The commissioner is not required to complete the inspection of the subdivision site before issuing a
public report. Nevertheless, if the commissioner discovers anything during any subsequent inspection that
would have been grounds to deny issuance of the public report or anything that would have warranted
additional disclosure in the public report, the commissioner may issue a summary order as provided in
section 32-2157.
D. Notwithstanding any other law, the commissioner has no more than five years after the date of an
initial complaint or initiation of an investigation by the commissioner to determine if the sale or lease
violated this article.
32-2183. Subdivision public reports; denial of issuance; unlawful sales; voidable sale or lease;
order prohibiting sale or lease; investigations; hearings; summary orders
A. Upon examination of a subdivision, the commissioner, unless there are grounds for denial, shall issue
to the subdivider a public report authorizing the sale or lease in this state of the lots, parcels or fractional
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interests within the subdivision. The report shall contain the data obtained in accordance with section 322181 and any other information which the commissioner determines is necessary to implement the
purposes of this article. If any of the lots, parcels or fractional interests within the subdivision are located
within territory in the vicinity of a military airport or ancillary military facility as defined in section 28-8461,
under a military training route as delineated in the military training route map prepared pursuant to section
37-102, under restricted air space as delineated in the restricted air space map prepared pursuant to
section 37-102 or contained in the military electronics range as delineated in the military electronics range
map prepared pursuant to section 37-102, the report shall include, in bold twelve point font block letters
on the first page of the report, the statements required pursuant to section 28-8484, subsection A, section
32-2183.05 or section 32-2183.06 and, if the department has been provided a map prepared pursuant to
section 28-8484, subsection B or section 37-102, the report shall include a copy of the map. The military
airport report requirements do not require the amendment or reissuance of any public report issued on or
before December 31, 2001 or on or before December 31 of the year in which the lots, parcels or fractional
interests within a subdivision become territory in the vicinity of a military airport or ancillary military facility.
The military training route report requirements do not require the amendment or reissuance of any public
report issued on or before December 31, 2004. The restricted air space report requirements do not
require the amendment or reissuance of any public report issued on or before December 31, 2006. The
military electronics range report requirements do not require the amendment or reissuance of any public
report issued on or before December 31, 2008. The commissioner shall require the subdivider to
reproduce the report, make the report available to each initial prospective customer and furnish each
initial buyer or lessee with a copy before the buyer or lessee signs any offer to purchase or lease, taking a
receipt therefor.
B. This section shall not be construed to require a public report issued sixty or fewer days prior to the
filing of the military electronics range map prepared pursuant to section 37-102 to meet the military
electronics range notification requirements of this section.
C. A public report issued sixty-one or more days after the filing of the military electronics range map
prepared pursuant to section 37-102 shall meet all of the requirements of subsection A of this section.
D. Notwithstanding subsection A of this section, a subdivider may elect to prepare a final public report for
use in the sale of improved lots as defined in section 32-2101, as follows:
1. The subdivider shall prepare the public report and provide a copy of the report to the
commissioner with the submission of the notification required by sections 32-2181 and 32-2184
and shall comply with all other requirements of this article.
2. An initial filing fee of five hundred dollars or an amended filing fee of two hundred fifty dollars
shall accompany the notification required by paragraph 1 of this subsection.
3. The department shall assign a registration number to each notification and public report
submitted pursuant to this subsection and shall maintain a database of all of these submissions.
The subdivider shall place the number on each public report.
4. On receipt of the notification and public report, the department shall review and issue within ten
business days either a certification that the notification and public report are administratively
complete or a denial letter if it appears that the application or project is not in compliance with all
legal requirements, that the applicant has a background of violations of state or federal law or that
the applicant or project presents an unnecessary risk of harm to the public. If the commissioner
has received the notification and public report but has not issued a certification or a denial letter
within ten business days pursuant to this paragraph, the notification and public report are
administratively complete.
5. A subdivider may commence sales or leasing activities as permitted under this article after
obtaining a certificate of administrative completeness from the commissioner.
6. Before or after the commissioner issues a certificate of administrative completeness or, if
applicable, after the notification and public report are deemed to be administratively complete
pursuant to paragraph 4 of this subsection, the department may examine any public report,
subdivision or applicant that has applied for or received the certificate. If the commissioner
determines that the subdivider or subdivision is not in compliance with any requirement of state
law or that grounds exist under this chapter to suspend, deny or revoke a public report, the
commissioner may commence an administrative action under section 32-2154 or 32-2157. If the
subdivider immediately corrects the deficiency and comes into full compliance with state law, the

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commissioner shall vacate any action that the commissioner may have commenced pursuant to
section 32-2154 or 32-2157.
7. The department shall provide forms and guidelines for the submission of the notification and
public report pursuant to this section.
E. The commissioner may suspend, revoke or deny issuance of a public report on any of the following
grounds:
1. Failure to comply with this article or the rules of the commissioner pertaining to this article.
2. The sale or lease would constitute misrepresentation to or deceit or fraud of the purchasers or
lessees.
3. Inability to deliver title or other interest contracted for.
4. Inability to demonstrate that adequate financial or other arrangements acceptable to the
commissioner have been made for completion of all streets, sewers, electric, gas and water
utilities, drainage and flood control facilities, community and recreational facilities and other
improvements included in the offering.
5. Failure to make a showing that the lots, parcels or fractional interests can be used for the
purpose for which they are offered.
6. The owner, agent, subdivider, officer, director or partner, subdivider trust beneficiary holding
ten per cent or more direct or indirect beneficial interest or, if a corporation, any stockholder
owning ten per cent or more of the stock in the corporation has:
(a) Been convicted of a felony or misdemeanor involving fraud or dishonesty or involving
conduct of any business or a transaction in real estate, cemetery property, time-share
intervals or membership camping campgrounds or contracts.
(b) Been permanently or temporarily enjoined by order, judgment or decree from
engaging in or continuing any conduct or practice in connection with the sale or purchase
of real estate or cemetery property, time-share intervals, membership camping contracts
or campgrounds, or securities or involving consumer fraud or the racketeering laws of this
state.
(c) Had an administrative order entered against him by a real estate regulatory agency or
security regulatory agency.
(d) Had an adverse decision or judgment entered against him involving fraud or
dishonesty or involving the conduct of any business or transaction in real estate,
cemetery property, time-share intervals or membership camping campgrounds or
contracts.
(e) Disregarded or violated this chapter or the rules of the commissioner pertaining to this
chapter.
(f) Controlled an entity to which subdivision (b), (c), (d) or (e) applies.
7. Procurement or an attempt to procure a public report by fraud, misrepresentation or deceit or
by filing an application for a public report that is materially false or misleading.
8. Failure of the declaration for a condominium created pursuant to title 33, chapter 9, article 2 to
comply with the requirements of section 33-1215 or failure of the plat for the condominium to
comply with the requirements of section 33-1219. The commissioner may require an applicant for
a public report to submit a notarized statement signed by the subdivider or an engineer or
attorney licensed to practice in this state certifying that the condominium plat and declaration of
condominium are in compliance with the requirements of sections 33-1215 and 33-1219. If the
notarized statement is provided, the commissioner is entitled to rely on this statement.
9. Failure of any blanket encumbrance or valid supplementary agreement executed by the holder
of the blanket encumbrance to contain provisions that enable the purchaser to acquire title to a lot
or parcel free of the lien of the blanket encumbrance, on completion of all payments and
performance of all of the terms and provisions required to be made or performed by the
purchaser under the real estate sales contract by which the purchaser has acquired the lot or
parcel. The subdivider shall file copies of documents acceptable to the commissioner containing
these provisions with the commissioner before the sale of any subdivision lot or parcel subject to
a blanket encumbrance.
10. Failure to demonstrate permanent access to the subdivision lots or parcels.
11. The use of the lots presents an unreasonable health risk.
F. It is unlawful for a subdivider to sell any lot in a subdivision unless one of the following occurs:
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1. All proposed or promised subdivision improvements are completed.
2. The completion of all proposed or promised subdivision improvements is assured by financial
arrangements acceptable to the commissioner. The financial arrangements may be made in
phases for common community and recreation facilities required by a municipality or county as a
stipulation for approval of a plan for a master planned community.
3. The municipal or county government agrees to prohibit occupancy and the subdivider agrees
not to close escrow for lots in the subdivision until all proposed or promised subdivision
improvements are completed.
4. The municipal or county government enters into an assurance agreement with any trustee not
to convey lots until improvements are completed within the portion of the subdivision containing
these lots, if the improvements can be used and maintained separately from the improvements
required for the entire subdivision plat. The agreement shall be recorded in the county in which
the subdivision is located.
G. If the subdivision is within an active management area, as defined in section 45-402, the commissioner
shall deny issuance of a public report or the use of any exemption pursuant to section 32-2181.02,
subsection B unless the subdivider has been issued a certificate of assured water supply by the director
of water resources and has paid all applicable fees pursuant to sections 48-3772 and 48-3774.01, or
unless the subdivider has obtained a written commitment of water service for the subdivision from a city,
town or private water company designated as having an assured water supply by the director of water
resources pursuant to section 45-576 or is exempt from the requirement pursuant to section 45-576.
H. In areas outside of active management areas, if the subdivision is located in a county that has adopted
the provision authorized by section 11-823, subsection A or in a city or town that has enacted an
ordinance pursuant to section 9-463.01, subsection O, the commissioner shall deny issuance of a public
report or the use of any exemption pursuant to section 32-2181.02, subsection B unless one of the
following applies:
1. The director of water resources has reported pursuant to section 45-108 that the subdivision
has an adequate water supply.
2. The subdivider has obtained a written commitment of water service for the subdivision from a
city, town or private water company designated as having an adequate water supply by the
director of water resources pursuant to section 45-108.
3. The plat was approved pursuant to an exemption authorized by section 9-463.01, subsection
K, pursuant to an exemption authorized by section 11-823, subsection B, paragraph 1, pursuant
to an exemption granted by the director of water resources under section 45-108.02 and the
exemption has not expired or pursuant to an exemption granted by the director of water
resources under section 45-108.03.
4. The subdivision received final plat approval from the city, town or county before the
requirement for an adequate water supply became effective in the city, town or county, and there
have been no material changes to the plat since the final plat approval. If changes were made to
the plat after the final plat approval, the director of water resources shall determine whether the
changes are material pursuant to the rules adopted by the director to implement section 45-108.
I. A subdivider shall not sell or lease or offer for sale or lease in this state any lots, parcels or fractional
interests in a subdivision without first obtaining a public report from the commissioner except as provided
in section 32-2181.01 or 32-2181.02, and a certificate of administrative completeness issued pursuant to
this section. Unless exempt, the sale or lease of subdivided lands prior to issuance of the public report or
failure to deliver the public report to the purchaser or lessee shall render the sale or lease rescindable by
the purchaser or lessee. An action by the purchaser or lessee to rescind the transaction shall be brought
within three years of the date of execution of the purchase or lease agreement by the purchaser or
lessee. In any rescission action, the prevailing party is entitled to reasonable attorney fees as determined
by the court.
J. On a print advertisement in a magazine or newspaper or on an internet advertisement that advertises a
specific lot or parcel of a subdivider, the subdivider shall include a disclosure stating that "a public report
is available on the state real estate department's website".
K. Any applicant objecting to the denial of a public report, within thirty days after receipt of the order of
denial, may file a written request for a hearing. The commissioner shall hold the hearing within twenty
days after receipt of the request for a hearing unless the party requesting the hearing has requested a
postponement. If the hearing is not held within twenty days after a request for a hearing is received, plus
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the period of any postponement, or if a proposed decision is not rendered within forty-five days after
submission, the order of denial shall be rescinded and a public report issued.
L. On the commissioner's own motion, or when the commissioner has received a complaint and has
satisfactory evidence that the subdivider or the subdivider's agent is violating this article or the rules of the
commissioner or has engaged in any unlawful practice as defined in section 44-1522 with respect to the
sale of subdivided lands or deviated from the provisions of the public report, the commissioner may
investigate the subdivision project and examine the books and records of the subdivider. For the purpose
of examination, the subdivider shall keep and maintain records of all sales transactions and funds
received by the subdivider pursuant to the sales transactions and shall make them accessible to the
commissioner upon reasonable notice and demand.
M. On the commissioner's own motion, or when the commissioner has received a complaint and has
satisfactory evidence that any person has violated this article or the rules of the commissioner or has
engaged in any unlawful practice as defined in section 44-1522 with respect to the sale of subdivided
lands or deviated from the provisions of the public report or special order of exemption, or has been
indicted for fraud or against whom an information for fraud has been filed or has been convicted of a
felony, before or after the commissioner issues the public report as provided in subsection A of this
section, the commissioner may conduct an investigation of the matter, issue a summary order as provided
in section 32-2157, or provide notice and hold a public hearing and, after the hearing, may issue the order
or orders the commissioner deems necessary to protect the public interest and ensure compliance with
the law, rules or public report or the commissioner may bring action in any court of competent jurisdiction
against the person to enjoin the person from continuing the violation or engaging in or doing any act or
acts in furtherance of the violation. The court may make orders or judgments, including the appointment
of a receiver, necessary to prevent the use or employment by a person of any unlawful practices, or
which may be necessary to restore to any person in interest any monies or property, real or personal, that
may have been acquired by means of any practice in this article declared to be unlawful.
N. When it appears to the commissioner that a person has engaged in or is engaging in a practice
declared to be unlawful by this article and that the person is concealing assets or self or has made
arrangements to conceal assets or is about to leave the state, the commissioner may apply to the
superior court, ex parte, for an order appointing a receiver of the assets of the person or for a writ of ne
exeat, or both.
O. The court, on receipt of an application for the appointment of a receiver or for a writ of ne exeat, or
both, shall examine the verified application of the commissioner and other evidence that the
commissioner may present the court. If satisfied that the interests of the public require the appointment of
a receiver or the issuance of a writ of ne exeat without notice, the court shall issue an order appointing
the receiver or issue the writ, or both. If the court determines that the interests of the public will not be
harmed by the giving of notice, the court shall set a time for a hearing and require notice be given as the
court deems satisfactory.
P. If the court appoints a receiver without notice, the court shall further direct that a copy of the order
appointing a receiver be served on the person engaged in or engaging in a practice declared to be
unlawful under this article by delivering the order to the last address of the person that is on file with the
state real estate department. The order shall inform the person that the person has the right to request a
hearing within ten days of the date of the order and, if requested, the hearing shall be held within thirty
days from the date of the order.
32-2183.01. Advertising material; contents; order prohibiting use; costs of investigation; drawings
or contests
A. Within ten days after request by the commissioner, the subdivider shall file with the commissioner a
copy of any advertising material used in connection with sales of the subdivided lands.
B. No advertising, communication or sales literature of any kind, including oral statements by
salespersons or other persons, shall contain:
1. Any untrue statement of material fact or any omission of material fact which would make such
statement misleading in light of the circumstances under which such statement was made.
2. Any statement or representation that the lot or parcels are offered without risk or that loss is
impossible.

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3. Any statement or representation or pictorial representation of proposed improvements or
nonexistent scenes without clearly indicating the improvements are proposed and the scenes do
not exist.
4. Any statement or representation that the lot or parcels are suitable as homesites or building
lots unless either of the following is true:
(a) Potable water is available from a certificated public utility or a municipal corporation
and either an individual sewage disposal system will operate or a sewer system is
available from a certified public utility or a municipal corporation.
(b) Facts to the contrary are clearly and conspicuously included in each advertisement
pertaining to the property.
C. All advertising and sales literature shall be consistent with the information contained in the notice of
intention pursuant to section 32-2181 and the public report pursuant to section 32-2183. The subdivider
shall retain and have available for department review copies of all advertising materials used in marketing
lots in the subdivision for three years after the last use of the advertising materials.
D. If it appears to the commissioner that any person is or has engaged in advertising or promotional
practices in violation of this article, the commissioner may hold a hearing as a contested case under title
41, chapter 6, article 10 and issue such order or orders as he deems necessary to protect the public
interest, or the commissioner may bring an action in any court of competent jurisdiction against such
person to enjoin such person from continuing such violation.
E. The commissioner may adopt such rules and guidelines as the commissioner deems necessary to
protect the public interest and to assure that all advertising and promotional practices with respect to land
subject to the provisions of this article are not false or misleading.
F. It is unlawful for any owner, subdivider, agent or employee of any subdivision or other person with
intent directly or indirectly to sell or lease lots or parcels subject to the provisions of this article to
authorize, use, direct or aid in any advertising, communication, sales literature or promotional practice
which violates this section.
G. Nothing contained in this section shall apply to the owner or publisher of a newspaper or magazine or
to any other publication of printed matter wherein such advertisement appears or to the owner or operator
of a radio or television station which disseminates such advertisement when the owner, publisher or
operator has no knowledge of the intent, design or purpose of the advertiser.
H. For any subdivision investigation made under section 32-2183 of an out-of-state subdivision or any instate subdivision to which the commissioner issues any order necessary to protect the public interest and
insure compliance with the law, rules or public report, the subdivider shall reimburse travel and
subsistence expenses incurred by the department.
I. A subdivider may hold a drawing or contest to induce prospective buyers to visit a subdivision if all of
the following requirements are met:
1. The subdivision has in effect a current public report.
2. The subdivider is not the subject of an ongoing investigation by the department. The
department may give permission to hold a drawing or contest to a subdivider who is the subject of
an ongoing investigation.
3. The details of the contest or drawing, including the method of awarding any prize, are
submitted to the department for review and approval prior to holding the contest or drawing.
4. Any drawing or contest is limited in time, scope and geographic location.
5. The material terms of the drawing or contest are fully disclosed in writing to participants.
6. No fee is charged to any person who participates in a drawing or contest.
7. No participant in a drawing or contest, as a condition of participation, must attend a sales
presentation or take a tour.
8. The subdivider is in compliance with all other applicable federal, state and local laws involving
drawings or contests.
9. The subdivider is responsible at all times for the lawful and proper conduct of any drawing or
contest.
32-2183.02. Recording of actions
A. Whenever the commissioner issues a cease and desist order, obtains a court order enjoining further
sales, issues an order of prohibition or suspends approval of a subdivision, the action shall be recorded in
the book of deeds in the office of the county recorder in any county in which the subdivision property is
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located and include the legal description of the affected land. The commissioner shall also provide notice
of the order or suspension to all affected parties with an ownership interest of record in any lot, parcel or
fractional interest in the subdivision property within ten business days of issuing the order of suspension.
B. In the event of revocation of any of the orders which require recording in subsection A, an order of
release shall be recorded in the same manner within ten business days after the revocation.
C. The department shall record a public notice for each plat, parcel or lot in the county in which the
subdivided land is located when the land has been subdivided in violation of this article. The notice shall
include the legal description of the affected land and provide that a city or town pursuant to authority
granted by the state under title 9 or to a county pursuant to authority granted under title 11 may decline to
issue building permits for the land until the requisite state and local approval is acquired. The department
shall record a release in the same manner within ten business days after the subdivision is in compliance
with this article.
32-2183.03. Civil liabilities
A. When any part of the notice of intention filed pursuant to section 32-2181 contains an untrue statement
of a material fact or omits a material fact required to be stated in such notice, the subdivider or agent shall
be liable as provided in this section to any person who acquires a lot or parcel in the subdivision covered
by such notice of intention during such period the notice of intention remained uncorrected unless at the
time of such acquisition the person acquiring the lot knew of such untruth or omission.
B. Any subdivider or agent who sells or leases a lot or parcel in a subdivision in violation of section 322183 or by means of a public report that contains an untrue statement of a material fact or omits a
material fact required to be stated in such report shall be liable to the purchaser of such lot or parcel as
provided in this section unless at the time of purchase the purchaser knew of the untruth or omission.
C. It is unlawful for a subdivider or agent in selling or leasing, or offering to sell or lease, any lot or parcel
in a subdivision to:
1. Employ any device, scheme or artifice to defraud.
2. Obtain money or property by means of a material misrepresentation with respect to any
information included in the notice of intention or the public report or with respect to any other
information pertinent to the lot, parcel or subdivision and on which the purchaser relies.
3. Engage in any transaction, practice or course of business that operates or would operate as a
fraud or deceit on a purchaser.
D. Except as provided in subsection E of this section, damages in any suit brought pursuant to this
section shall be the difference between the purchase price of the lot or parcel plus the cost of any
improvements made to such lot or parcel and the following applicable amount:
1. The price at which such lot or parcel was sold in a bona fide market transaction prior to suit or
judgment.
2. If the lot or parcel has not been sold before judgment, the current market value of the lot or
parcel and any improvements as of the date the suit was filed.
E. The damages described in subsection D of this section shall not exceed the dollar amount that is the
difference in price or market value that results from the untrue statement of material fact or omission of
material fact that is required to be stated in the public report.
F. In any action in which a violation of this section is established the purchaser shall also be entitled to
recover reasonable attorney fees as determined by the court. If a violation is not established, the court, in
its discretion, may award reasonable attorney fees to the defendant.
G. Every person who becomes liable to make any payment pursuant to this section may recover
contribution as in cases of contract from any person who, if sued separately, would have been liable to
make the same payment.
H. In no case shall the amount recoverable pursuant to this section exceed the sum of the purchase price
of the lot or parcel, the reasonable cost of improvements installed by the purchaser and reasonable court
costs and attorneys' fees.
I. Nothing contained in this section shall be construed to preclude any other remedies that may exist at
law or in equity.
J. No action shall be maintained to enforce any liability created pursuant to subsection A or B of this
section unless brought within one year after the discovery of the untrue statement or the omission or after
such discovery should have been made by the exercise of reasonable diligence. No action shall be
maintained to enforce any liability created pursuant to subsection C of this section unless brought within
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two years after the violation on which it is based. In no event shall any such action be brought by a
purchaser more than three years after the sale or lease to such purchaser.
32-2183.04. Surety bond requirement; form; cancellation; effective date; certificate of deposit
A. In addition to any other fees assessed under this chapter, any subdivider prior to the sale or lease of
any existing unimproved lots or parcels and any subdivider who is subsequently required to give notice
under section 32-2181 or 32-2195 or who petitions for exemption under section 32-2181.01 may be
required to post a surety bond with the commissioner if any of the following applies:
1. The subdivider has been found in violation of any subdivision laws of this state or of any other
state or any of the rules of the state real estate department.
2. The subdivider has been found in violation of the interstate land sales full disclosure act or any
of the rules and regulations of the office of interstate land sales registration.
3. The subdivider has been found by a court of competent jurisdiction to be guilty of fraud or
misrepresentation in the sale of subdivided lands and the finding or determination has become a
final adjudication.
4. The subdivider has been found by an administrative agency to be guilty of fraud or
misrepresentation in the sale of subdivided lands and from the decision there is no appeal.
B. The bond required by subsection A of this section shall be in a form acceptable to the commissioner
and shall be executed by the subdivider as principal with a corporation duly authorized to transact surety
business in this state. Evidence of a surety bond shall be submitted to the commissioner in accordance
with rules adopted by the commissioner. The bond shall be in favor of the state and shall be subject to
claims by any person who is injured by the fraud or misrepresentation of a subdivider in the purchase or
lease of a lot or parcel. One bond shall be required for each subdivision or each common plan of
subdivided lands subject to the requirements of article 7 of this chapter. The principal sum of the bond
shall be in an amount the commissioner deems necessary to protect purchasers when the volume of
business of the subdivider and other relevant factors are taken into consideration.
C. The surety bond shall continue in effect until two years after all sales within the subdivision or common
plan have been completed. No suit may be maintained on the bond after the expiration of two years
following the subdivider's sale or lease of a lot or parcel to the person maintaining the action.
D. Upon receipt by the commissioner of notice to cancel a bond by any surety, the commissioner shall
immediately notify the subdivider on the bond of the effective date of cancellation of the bond and the
subdivider shall furnish a like bond within thirty days after mailing of notice by the commissioner or the
subdivider's right to sell or lease lots or parcels in any subdivision shall be suspended. Notice to the
subdivider shall be by certified mail in a sealed envelope with postage fully prepaid, addressed to the
subdivider's latest address of record in the commissioner's office. The subdivider's right to sell or lease
lots or parcels shall be suspended by operation of law on the date the bond is canceled, unless a
replacement bond is filed with the commissioner.
E. In lieu of posting a bond as set forth in this section, the subdivider may post a certificate of deposit with
the commissioner in accordance with the provisions of subsections A, B and C of this section.
32-2183.05. Military training route disclosure; military electronics range disclosure; residential
property
A. Any public report that is issued after December 31, 2004 pursuant to section 32-2183 or 32-2195.03
and that is applicable to property located under a military training route, as delineated in the military
training route map prepared by the state land department pursuant to section 37-102, and any public
report that is issued after December 31, 2008 and that is applicable to property located in a military
electronics range as delineated in the military electronics range map prepared by the state land
department pursuant to section 37-102, shall include the following statements:
1. The property is located under a military training route or in a military electronics range.
2. The state land department and the state real estate department maintain military training route
maps and military electronics range maps available to the public.
3. The military training route map and military electronics range map are posted on the state real
estate department's website.
B. The public report prescribed by subsection A of this section may contain a disclaimer that the
subdivider has no control over the military training routes as delineated in the military training route map

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or the timing or frequency of flights and associated levels of noise and has no control over the military
electronics range and its testing and training operations.
C. For any lot reservation or conditional sale that occurs before the issuance of a public report, the
disclosure statements listed in subsection A of this section shall be included within the reservation
document or conditional sales contract.
D. This section does not require the amendment or reissuance of any public report issued on or before
December 31, 2004 that is applicable to property located under a military training route, as delineated in
the military training route map prepared by the state land department pursuant to section 37-102 or on or
before December 31, 2008 that is applicable to property located in a military electronics range, as
delineated in the military electronics range map prepared by the state land department pursuant to
section 37-102 or the amendment or reissuance of any reservation document or conditional sales
contract accepted on or before December 31, 2004 or on or before December 31, 2008.
E. Notwithstanding any other law, if the public report complies with subsection A of this section, a
subdivider is not liable to any person or governmental entity for any act or failure to act in connection with
the disclosure of a military training route as delineated in the military training route map or a military
electronics range as delineated in the military electronics range map.
F. This section shall not be construed to require a public report issued sixty or fewer days prior to the
filing of the military electronics range map prepared pursuant to section 37-102 to meet the military
electronics range notification requirements of this section.
G. A public report issued sixty-one or more days after the filing of the military electronics range map
prepared pursuant to section 37-102 shall meet all of the requirements of subsection A of this section.
32-2183.06. Restricted air space disclosure; residential property
A. Any public report that is issued after December 31, 2006 pursuant to section 32-2183 or 32-2195.03
and that is applicable to property located under restricted air space, as delineated in the restricted air
space map prepared by the state land department pursuant to section 37-102, shall include the following
statements:
1. The property is located under restricted air space.
2. The state land department and the state real estate department maintain restricted air space
maps available to the public.
3. The restricted air space map is posted on the state real estate department's web site.
B. The public report prescribed by subsection A of this section may contain a disclaimer that the
subdivider has no control over the restricted air space as delineated in the restricted air space map or the
timing or frequency of flights and associated levels of noise.
C. For any lot reservation or conditional sale that occurs before the issuance of a public report, the
disclosure statements listed in subsection A of this section shall be included within the reservation
document or conditional sales contract.
D. This section does not require the amendment or reissuance of any public report issued on or before
December 31, 2006 or the amendment or reissuance of any reservation document or conditional sales
contract accepted on or before December 31, 2006.
E. Notwithstanding any other law, if the public report complies with subsection A of this section, a
subdivider is not liable to any person or governmental entity for any act or failure to act in the disclosure
of restricted air space as delineated in the restricted air space map.
32-2184. Change of subdivision plan after approval by commissioner; notice
A. It is unlawful for any subdivider, after submitting to the commissioner the plan under which a
subdivision is to be offered for sale or lease, and securing his approval, to change the plan materially or
to continue to offer lots or parcels within the subdivision for sale or lease after a change has occurred that
materially affects the plan without first notifying the commissioner in writing of the intended change.
Material changes covered by this section shall be prescribed in the rules of the commissioner. Upon
receipt of any notice of a material change, the commissioner may require the amendment of the public
report and, if he determines such action to be necessary for the protection of purchasers, suspend his
approval of sale or lease pending amendment of the public report in accordance with section 32-2157.
B. If there has been a material change to the plan under which a subdivision is offered for sale or lease
and an amendment to the public report is required, a purchaser or lessee who has executed a real estate
sales contract or lease before the occurrence of the material change but has not yet completed
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performance under the real estate sales contract or has not taken possession under the lease may cancel
the real estate sales contract or lease within ten days after receiving written notice from the subdivider of
the material change if the material change adversely impacts the purchaser or lessee and was caused by
the subdivider or an entity controlled by the subdivider or if the subdivider had actual knowledge of the
material change at the time the real estate sales contract or lease was executed by the purchaser or
lessee. Notwithstanding that the subdivider was not aware of the material change and did not cause the
change to come about, the purchaser or lessee may cancel the sales contract or lease as provided by
this subsection if the material change would involve an occupant's health, safety or ability to make
designated use of the lot. This subsection does not create any cause of action, for rescission or
otherwise, in favor of a purchaser who has not been impacted adversely by the material change.
C. A filing fee of one-half of the amount that was charged for the initial public report pursuant to section
32-2182, but no less than two hundred fifty dollars, shall accompany an application for an amended public
report. If inspection of a subdivision site is necessary, the department shall assess an inspection fee
pursuant to section 32-2182, subsection A.
32-2185. Delivery of clear title by vendor on performance of contract by vendee
It is unlawful to sell to any purchaser any subdivision lot or parcel that is subject to a blanket
encumbrance, unless there is a provision in the blanket encumbrance, or in a valid supplementary
agreement executed by the holder of the blanket encumbrance, enabling the purchaser to acquire title to
the lot or parcel free of the blanket encumbrance upon completion of all payments and performances of
all the terms and provisions required to be made or performed by the purchaser under the real estate
sales contract. Certified or verified copies of documents acceptable to the commissioner containing such
provisions shall be filed with the commissioner prior to the sale of any subdivision lot or parcel subject to
a blanket encumbrance.
32-2185.01. Sale of unimproved lots or parcels; conditions precedent; methods
A. It is unlawful for the owner, agent or subdivider of subdivided lands to sell or offer to sell unimproved
lots or parcels within a subdivision unless the sale complies with one of the following:
1. Execution, delivery and recording of a deed in good and sufficient form conveying to the
purchaser merchantable and marketable title to the property subject only to such exceptions as
may be agreed to in writing by the purchaser. Any balance remaining unpaid by the purchaser
may be evidenced by a note and mortgage or deed of trust. The deed and mortgage or deed of
trust shall be recorded by the owner, agent or subdivider within sixty days of execution thereof by
the purchaser.
2. Execution, delivery, recording and depositing in escrow, not later than sixty days after
execution by the purchaser, with a person or firm authorized to receive escrows under the laws of
this state or the state in which the subdivision is located, of a real estate sales contract pertaining
to the property, which contract sets forth the full and correct legal description of the property
being sold and the precise terms and conditions under which the property is being sold together
with:
(a) A copy of a preliminary title report showing the conditions of title to the property on the
date of the real estate sales contract or a preliminary title report showing the condition of
title on an earlier date together with a copy of any document, recorded subsequent to the
date of the preliminary title report, which affects the title to the property.
(b) An executed deed in good and sufficient form conveying to the purchaser
merchantable and marketable title, subject only to such exceptions as may be agreed to
in writing by the purchaser which deed, under the terms of the real estate sales contract,
is to be delivered to the escrow agent provided for under the contract within sixty days of
the purchaser's execution of the contract and is to be recorded within sixty days after
purchaser's compliance with the obligations imposed on him under the contract together
with any release or partial release of any blanket encumbrance pertaining to said lot.
(c) Any and all documents necessary to release or extinguish any blanket encumbrance
to the extent it applies to the real property being sold, or a partial release of the lot or
parcel being sold from the terms and provisions of such blanket encumbrance.
3. Execution, delivery and recording of a deed to the real property to a trustee together with a
trust agreement and any and all documents necessary to release or extinguish any blanket
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encumbrance to the extent it applies to property being sold, or a partial release of the lot or parcel
being sold from the terms and provisions of such blanket encumbrance. The trust agreement
shall provide for conveyance by the trustee to a purchaser, upon purchaser's compliance with the
obligations imposed on him under his real estate sales contract, by a deed in good and sufficient
form conveying to the purchaser merchantable and marketable title, subject only to such
exceptions as may be agreed to in writing by the purchaser. The real estate sales contract of the
lot being sold shall be recorded by the owner, agent or subdivider within sixty days of execution of
the real estate sales contract by the purchaser. The trustee shall execute, record and deliver the
deed and record the release or partial release required by this subsection within sixty days of the
purchaser's fulfillment of the terms of his real estate sales contract.
B. All documents required to be recorded under the provisions of this section shall be recorded in the
county and state wherein the subdivision is located.
C. Any sale or assignment of a mortgage, deed of trust or real estate sales contract by an owner, agent,
subdivider or trustee shall be recorded in the county and state where the subdivision is located and a
notice of such sale or assignment provided to the commissioner, the recording and notice thereof to be
effected not later than sixty days after the execution of such assignment.
D. Any contract or agreement entered into after January 1, 1977, to purchase or lease an unimproved lot
or parcel may be rescinded by the purchaser without cause of any kind by sending or delivering written
notice of rescission by midnight of the seventh calendar day following the day on which the purchaser or
prospective purchaser has executed such contract or agreement. The subdivider shall clearly and
conspicuously disclose, in accordance with regulations adopted by the commissioner, the right to rescind
provided for in this subsection and shall provide, in accordance with regulations adopted by the
commissioner, an adequate opportunity to exercise the right to rescission within the time limit set forth in
this subsection. The commissioner may adopt regulations to exempt commercial and industrial
subdivisions from such requirements.
E. If a buyer of an unimproved lot or parcel has not inspected the lot or parcel prior to the execution of the
purchase agreement, the buyer shall have a six-month period after the execution of the purchase
agreement to inspect the lot or parcel and at the time of the inspection have the right to unilaterally
rescind the purchase agreement. At the time of inspection the buyer must sign an affidavit stating that he
has inspected the lot, and at the request of the commissioner, such affidavit may be required to be filed
with the department.
F. Only a bank, savings and loan association, or title insurance company doing business under the laws
of this state or the United States or the state in which the subdivision is located, or a title insurance
company wholly owned subsidiary or underwriting agent qualified under section 20-1580, or persons or
firms authorized to receive escrows under the laws of this state or the state in which the subdivision is
located may act as trustee under paragraph 3 of subsection A of this section. Nothing in this subsection
extends to a firm or individual authority to act as a trustee unless such authority is otherwise provided by
law.
G. The provisions of this section shall not apply to the sale of improved lots as defined by section 322101.
H. The provisions of this section shall not apply to the sale of cemetery lots or parcels within a cemetery
which has been formed and approved pursuant to the provisions of this chapter.
32-2185.02. Permanent access to subdivided land; rescindable sales
A. No subdivided land may be sold without provision for permanent access to the land over terrain which
may be traversed by conventional motor vehicle unless such provision is waived by the commissioner.
B. Any sale of subdivided land which is without permanent access is rescindable by the purchaser. An
action by the purchaser to rescind such transaction shall be brought within three years of the date of
execution of the real estate sales contract by the purchaser.
32-2185.03. Deposit of fees
All fees and earned expense collected under this chapter shall be deposited in the state general fund
unless otherwise prescribed by law.

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32-2185.06. Contract disclosures; contract disclaimers
All agreements and contracts for the purchase or lease of subdivided land from a subdivider, owner or
agent shall clearly and conspicuously disclose, in accordance with regulations adopted by the
commissioner, the nature of the document, the purchaser's right to receive a copy of the public report
and, in the case of unimproved lots or parcels not exempted by regulation pursuant to section 322185.01, the purchaser's right to rescind the agreement as provided in section 32-2185.01. Any contract,
agreement or lease which fails to make disclosures pursuant to this section shall not be enforceable
against the purchaser. If the transaction involves a lot or parcel offered for present or future residential
use, the contract, agreement or lease shall not waive or disclaim liability for prior material representations
relied upon by the purchaser made by the seller and such seller's agents concerning the subdivision and
lot or parcel involved, and any provision attempting to waive or disclaim liability is void.
32-2185.07. Jurisdiction
The commissioner shall not be denied jurisdiction over any person subject to the provisions of this article
because of similar jurisdiction over such person by any other agency or the applicability to such person of
any regulation prescribed pursuant to any other provision of law.
32-2185.08. Recordable forms of contracts
Each purchaser of subdivided land under a contract as defined in section 33-741 shall be provided with a
copy in recordable form of the contract on its execution by the purchaser and seller.
32-2185.09. Civil penalties; limitation
A. A subdivider or agent who is subject to the jurisdiction of the department, who violates this chapter or
any rule adopted or order issued by the commissioner or who engages in any unlawful practices defined
in section 44-1522 with respect to the sale or lease of subdivided lands may be assessed a civil penalty
by the commissioner, after a hearing, in an amount not to exceed one thousand dollars for each
infraction. An infraction which concerns more than one lot in a subdivision is a single infraction for the
purposes of this section.
B. A proceeding for imposition of a civil penalty or for suspension or revocation of a license for a violation
of this article or any rule adopted or order issued by the commissioner must be commenced within five
years of actual discovery by the department or discovery which should have occurred with the exercise of
reasonable diligence by the department.
C. A subdivider who sells or leases in this state any lots, parcels or fractional interest in a subdivision
without first obtaining a public report from the commissioner except as provided in section 32-2181.01 or
32-2182.02 for a lot or lots created from and after December 31, 2008 and on an order issued by the
commissioner, may be assessed a civil penalty by the commissioner, after a hearing, in an amount not to
exceed five thousand dollars for each infraction. A proceeding for the imposition of a civil penalty or
suspension or revocation of a license for a violation of this subsection or any rule adopted or order issued
by the commissioner must be commenced within five years of actual discovery by the department or
discovery that should have occurred with the exercise of reasonable diligence by the department.

Article 5 Real Estate Recovery Fund
32-2186. Real estate recovery fund; liability limits; definitions
A. The commissioner shall establish and maintain a real estate recovery fund for the benefit of any
person aggrieved by any act, representation, transaction or conduct of a licensed real estate or cemetery
broker or real estate or cemetery salesperson that violates this chapter or the rules adopted pursuant to
this chapter. The fund shall only pay for a loss that is an actual and direct out-of-pocket loss to the
aggrieved person directly arising out of the real estate or cemetery transaction, including reasonable
attorney fees and court costs, in which the licensee either:
1. Performed acts that required a real estate or cemetery license pursuant to this chapter.
2. Engaged in fraud or misrepresentation while acting as a principal in the purchase or sale of
real property and the aggrieved person relied on the broker's or salesperson's licensed status.
B. The fund's liability shall not exceed:
1. Thirty thousand dollars for each transaction, regardless of the number of persons aggrieved or
the number of licensees or parcels of real estate involved.
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2. Ninety thousand dollars for each licensee.
C. The liability of the fund for the acts of a licensed real estate or cemetery broker or real estate or
cemetery salesperson is terminated upon the issuance of orders authorizing payments from the fund in
an aggregate amount as prescribed by subsection B of this section.
D. A licensee acting as a principal or agent in a real estate transaction has no claim against the fund,
including marital communities, corporations, limited liability companies and partnerships in which the
licensee is a principal, member, general partner, officer or director, or those entities in which the licensee
holds a direct or indirect interest of at least ten per cent.
E. The fund is liable to pay only against the license of a natural person, not on that of a corporation, a
partnership or any other fictitious entity.
F. The fund is liable to pay only for damages arising out of a transaction in which the defendant licensee
performed acts for which a real estate or cemetery license was required or when the defendant licensee,
while acting as principal in the purchase or sale of real property, engaged in fraud or misrepresentation
and the aggrieved person was harmed due to reliance on the defendant's licensed status.
G. The fund is not liable for damages or losses resulting from or caused by:
1. Speculation, including lost profits and other unrealized losses.
2. Transactions for property that is located outside of this state.
3. Loans, notes, limited partnerships or other securities, regardless of whether the loss was
caused by an investment in or was secured by real property.
4. A judgment entered against a bonding company if the bonding company is not a principal in the
underlying real estate transaction.
5. A tenant's conduct or neglect.
6. Vandalism.
7. Natural causes.
8. Punitive damages.
9. Postjudgment interest.
10. Undocumented transactions or losses.
H. In this article, unless the context otherwise requires:
1. "Judgment" means either:
(a) A final judgment in a court of competent jurisdiction.
(b) A criminal restitution order issued pursuant to section 13-603 or 18 United States
Code section 3663.
(c) An arbitration award that includes findings of fact and conclusions of law, that has
been confirmed and reduced to judgment pursuant to section 12-133 and that was
rendered according to title 12 and the rules of the American arbitration association or
another recognized arbitration body.
2. "Judgment debtor" means any defendant under this article who is the subject of a judgment.
32-2187. Payments to real estate recovery fund
A. In addition to any other fees, payments shall be made to the real estate recovery fund on application
by any person, as follows:
1. For an original real estate or cemetery broker's license, twenty dollars.
2. For an original real estate or cemetery salesperson's license, ten dollars.
B. If, on June 30 of any year, the balance remaining in the real estate recovery fund is less than six
hundred thousand dollars, every broker when renewing a real estate or cemetery license during the
following license year shall pay, in addition to the license renewal fee, a fee of twenty dollars for deposit in
the real estate recovery fund, and every salesperson when renewing a real estate or cemetery license
during such year shall pay, in addition to the license renewal fee, a fee of ten dollars for deposit in the real
estate recovery fund.
32-2188. Statute of limitations; service of summons; application for payment; insufficient monies;
definition
A. An action for a judgment that subsequently results in an order for payment from the real estate
recovery fund shall not be started later than five years from the accrual of the cause of action.
B. If an aggrieved person commences an action for a judgment that may result in an order for payment
from the real estate recovery fund, and the defendant licensee cannot be served process personally in
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this state, the summons may be served by the alternative methods of service provided for by the Arizona
rules of civil procedure, including service by publication. A judgment that complies with the provisions of
this section and that was obtained after service by publication only applies to and is enforceable against
the real estate recovery fund. The department may intervene in and defend any such action.
C. An aggrieved person may apply to the department for payment from the real estate recovery fund after
the aggrieved person obtains a judgment against a real estate or cemetery broker or salesperson based
on the licensee's act, representation, transaction or conduct in violation of this chapter or the rules
adopted pursuant to this chapter. The claimant must file the original application, including appendices,
within two years after the termination of all proceedings, reviews and appeals connected with the
judgment. The commissioner, in the commissioner's sole discretion, may waive the two-year application
deadline if the commissioner determines that the waiver best serves the public interest. Delivery of the
application must be by personal service or by certified mail, return receipt requested.
D. The application must be within the limitations prescribed in section 32-2186 for the amount unpaid on
the judgment that represents the claimant's actual and direct loss on the transaction.
E. The department shall prescribe and supply an application form that includes detailed instructions with
respect to documentary evidence, pleadings, court rulings, the products of discovery in the underlying
litigation and notice requirements to the judgment debtor under section 32-2188.01. The claimant must
submit the claim on an application form supplied by the department. The application must include:
1. The claimant's name and address.
2. If the claimant is represented by an attorney, the attorney's name, business address and
telephone number.
3. The judgment debtor's name and address or, if unknown, the names and addresses of persons
who may know the judgment debtor's present location.
4. A detailed narrative statement of the facts explaining the allegations of the complaint on which
the underlying judgment is based, with a copy of the contracts, receipts and other documents
from the transaction, the last amended complaint, all existing recorded judgments, documentation
of actual and direct out-of-pocket losses and any offsetting payment received and all collection
efforts attempted.
5. The identification of the judgment, the amount of the claim and an explanation of its
computation, including an itemized list of actual and compensatory damages awarded and
claimed.
6. For the purpose of an application that is not based on a criminal restitution order, a statement
by the claimant, signed under penalty of perjury, that the complaint on which the underlying
judgment is based was prosecuted conscientiously and in good faith. For the purposes of this
paragraph, "conscientiously and in good faith" means that all of the following apply:
(a) No party that was potentially liable to the claimant in the underlying transaction was
intentionally and without good cause omitted from the complaint.
(b) No party named in the complaint who otherwise reasonably appeared capable of
responding in damages was intentionally and without good cause dismissed from the
complaint.
(c) The claimant employed no other procedural means contrary to the diligent prosecution
of the complaint in order to seek to qualify for the recovery fund.
7. For the purpose of an application that is based on a criminal restitution order, all of the
following statements by the claimant, signed under penalty of perjury:
(a) The claimant has not intentionally and without good cause failed to pursue any person
potentially liable to the claimant in the underlying transaction other than a defendant who
is the subject of a criminal restitution order.
(b) The claimant has not intentionally and without good cause failed to pursue in a civil
action for damages all persons potentially liable to the claimant in the underlying
transaction who otherwise reasonably appeared capable of responding in damages other
than a defendant who is the subject of a criminal restitution order.
(c) The claimant employed no other procedural means contrary to the diligent prosecution
of the complaint in order to seek to qualify for the recovery fund.
8. The following statements, signed under penalty of perjury, and information from the claimant:
(a) The claimant is not a spouse of the judgment debtor or a personal representative of
the spouse.
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(b) The claimant has complied with all of the requirements of this article.
(c) The judgment underlying the claim meets the requirements of this article.
(d) The claimant has recorded a certified copy of the superior court judgment or transcript
of judgment pursuant to sections 33-961 and 33-962 in the county where the judgment
was obtained and in the counties where all judgment debtors reside and has provided a
copy of the recorded judgment to the commissioner.
(e) The claimant has caused the judgment debtor to make discovery under oath,
pursuant to section 12-1631, concerning the debtor's property.
(f) The claimant has caused a writ of execution to be issued on the judgment and the
officer executing the writ has made a return showing either:
(i) That no personal or real property of the judgment debtor liable to be levied on
in satisfaction of the judgment could be found, sold or applied.
(ii) That the amount realized on the sale of the property, or as much of the
property that was found, under the execution was insufficient to satisfy the
judgment.
(g) The claimant has caused a writ of garnishment to be issued to each known employer
of the judgment debtor ascertained by the claimant, that each garnishee-defendant has
complied with the respective writ and any judgment or order resulting from the writ and
that the amount realized from all judgments against the garnishee-defendants was
insufficient to satisfy the balance due on the judgment.
(h) The claimant has deducted the following amounts from the actual or compensatory
damages awarded by the court:
(i) Any amount recovered or anticipated from the judgment debtor or debtors.
(ii) Any amount recovered through collection efforts undertaken pursuant to
subdivisions (d) through (g) of this paragraph and including an itemized valuation
of the assets discovered and amounts applied.
(iii) Any amount recovered or anticipated from bonding, insurance or title
companies, including recovery of punitive damages.
(iv) Any amount recovered or anticipated from in-court or out-of-court
settlements.
(v) Any amount of tax benefits accrued or taken as deductions on federal, state
or local income tax returns.
F. If the claim is based on a judgment against a salesperson or broker and the claimant has not obtained
a judgment against the salesperson's or broker's employing broker, if any, or has not diligently pursued
the assets of the employing broker, the department shall deny the claim for failure to diligently pursue the
assets of all other persons liable to the claimant in the transaction unless the claimant demonstrates, by
clear and convincing evidence, that either:
1. The salesperson or broker was not employed by a broker at the time of the transaction.
2. The salesperson's or broker's employing broker would not have been liable to the claimant
because the salesperson or broker acted outside the scope of employment in the transaction.
G. The commissioner, at the commissioner's sole discretion, may waive compliance with one or more of
the requirements enumerated in subsection E, paragraph 8 or subsection F of this section if the claim is
based on an award pursuant to a criminal restitution order or if the commissioner is satisfied that the
claimant has taken all reasonable steps to collect the amount of the judgment or the unsatisfied part of
the judgment from all judgment debtors but has been unable to collect.
H. If the commissioner finds it is likely that the total remaining liability of the recovery fund is insufficient to
pay in full the valid claims of all aggrieved persons who may have claims against any one licensee, the
commissioner may petition the court to initiate a proration proceeding. The court shall grant the petition
and order a hearing to distribute the total remaining liability of the fund among the applicants in the ratio
that their respective claims bear to the aggregate of the valid claims or in such other manner as the court
deems equitable. The commissioner or any party may file a proposed plan for equitable distribution of the
available monies. The distribution of monies shall be among the persons entitled to share them, without
regard to the order of priority in which their respective judgments may have been obtained or their
respective applications may have been filed. The court may require all applicants and prospective
applicants against one licensee to be joined in one action, to the end that the respective rights of all the
applicants to the recovery fund may be equitably adjudicated and settled. The court shall not include in
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the claims for proration the claim of any person who has not, within ninety days after the court has
entered the order for proration, filed a complaint with the court, served the licensee and provided written
notice of the claim to the commissioner. The liability of the fund on any application affected by a proration
proceeding is based on the limits in effect on the date when the last application for payment is filed. The
court may refuse to consider or award prorated recovery to any person who fails to expeditiously
prosecute a claim against the licensee or promptly file an application for payment and submit supporting
documentation as required by this article.
I. If the commissioner pays from the real estate recovery fund any amount in settlement of an applicant's
claim or toward satisfaction of a judgment against a licensed broker, designated broker for a corporation
or salesperson, the license of the broker, designated broker for a corporation or salesperson shall be
automatically terminated upon the issuance of an order authorizing payment from the real estate recovery
fund. A broker, designated broker for a corporation or salesperson is not eligible to receive a new license
until the licensee has repaid in full, plus interest at the rate provided by section 44-1201, the amount paid
from the real estate recovery fund on the licensee's account and has provided evidence to the
commissioner that the judgment has been fully satisfied.
J. If, at any time, the money deposited in the real estate recovery fund is insufficient to satisfy any duly
authorized claim or portion of a claim, the commissioner shall, when sufficient money has been deposited
in the real estate recovery fund, satisfy the unpaid claims or portions of claims, in the order that the claims
or portions of claims were originally filed, plus accumulated interest at the rate of four per cent a year.
K. For the purposes of this section, "complaint" means the facts of the transaction on which the judgment
is based.
32-2188.01. Notice of claim to judgment debtor; response
A. Within the same time prescribed by section 32-2188, subsection C for applying for payment from the
real estate recovery fund, an aggrieved party who applies for payment shall serve notice of the claim on
the judgment debtor, together with a copy of the application. The notice shall be in the following form:
Notice
Based on a judgment against you in favor of (enter name of claimant), application is being made to the
Arizona state real estate department for payment from the real estate recovery fund.
If payment is made from the real estate recovery fund, all licenses and license rights that you have under
the Arizona real estate law will be automatically terminated on the date of payment and may only be
reinstated pursuant to section 32-2131, subsection A, paragraph 3, Arizona Revised Statutes, on a
showing that 1) the real estate recovery fund has been reimbursed for the amount paid plus interest at the
current legal rate, 2) the underlying judgment has been fully satisfied and 3) you have filed an original
application for a license.
If you wish to contest payment from the real estate recovery fund, you must file a written response to the
application. The Arizona state real estate commissioner must receive your response at (address) within
35 calendar days after the date this notice is [mailed, delivered, first published]. You must also send a
copy of the response to the claimant. If you fail to respond as required, you waive your right to present
your objections to payment.
B. If the judgment debtor holds a current license issued by the department, the notice and copy of the
application may be served by certified mail, return receipt requested, addressed to the judgment debtor's
latest business or residence address on file with the department. If the judgment debtor does not hold a
current license and if personal delivery cannot be effected by exercising reasonable diligence, the
claimant must publish the notice once a week for two consecutive weeks in a newspaper of general
circulation in the county in which the judgment debtor was last known to reside.
C. If the judgment debtor fails to file a written response to the application with the department within thirtyfive calendar days after service under subsection B of this section or after the first publication of the
notice, the judgment debtor is not thereafter entitled to notice of any action taken or proposed to be taken
by the commissioner with respect to the claim.
32-2188.02. Correction of deficiencies in the application
A. If the commissioner determines that a claimant’s application fails to comply substantially with the
requirements of section 32-2188 or rules adopted pursuant to this chapter, the commissioner, within thirty
calendar days after receiving the application, shall mail an itemized list of deficiencies to the claimant.
For the purposes of this subsection, "comply substantially" means filing with the department the
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documents that are minimally necessary to process a claim, including at least a certified copy of the
judgment, legible copies of documents establishing the underlying transaction and amounts of losses
suffered and a statement concerning amounts recovered from or on behalf of the judgment debtor.
B. The claimant must respond within sixty calendar days after receiving the list of deficiencies by
providing the information identified by the commissioner. If the claimant fails to correct the deficiencies
within sixty calendar days, the department shall close the file unless the claimant requests an extension in
writing. A claimant whose file has been closed may submit a new application as provided by section 322188.
C. The deadline prescribed by section 32-2188.04 for the commissioner to make a decision on the
application is suspended from the date the commissioner mails the list of deficiencies to the applicant
until the date the department receives the requested information.
32-2188.03. Investigation and discovery
In considering and investigating an application, the department may use all appropriate means of
investigation and discovery that are available pursuant to this chapter.
32-2188.04. Final decision and order on claim; notice
A. The commissioner shall make a final written decision and order on a claim within ninety calendar days
after receiving a completed application except in the following cases:
1. A proration hearing is pending under section 32-2188, subsection H.
2. An application is deficient or fails to comply substantially with the requirements of section 322188 or rules adopted pursuant to this chapter as determined pursuant to section 32-2188.02.
The ninety day time period begins under this subsection when the department receives an
application that is substantially complete.
3. The claimant agrees in writing to extend the time for making a decision.
B. If the commissioner fails to render a written decision and order on a claim within ninety calendar days,
or within an extended period of time provided under subsection A of this section, the claim is considered
to be approved on the day following the final day for rendering the decision.
C. The commissioner may approve or deny an application or may enter into a compromise with the
claimant to pay less in settlement than the full amount of the claim. If the claimant refuses to accept a
settlement offered by the commissioner, the commissioner shall deny the claim.
D. The commissioner shall give notice of a decision and order with respect to the claim to the claimant
and to any judgment debtor who has filed a timely response to the claim pursuant to section 32-2188.01
as follows:
1. If the commissioner denies the application, the notice shall include the following: “The
claimant's application has been denied. If the claimant wishes to pursue the application in court,
the claimant must file the application in the court in which the underlying judgment was entered
within six months after receiving this notice, pursuant to section 32-2188.05, Arizona Revised
Statutes.”
2. If the commissioner's decision is to make a payment to the claimant out of the real estate
recovery fund, the following notice shall be given to the judgment debtor with a copy of the
decision and order of the commissioner: “The decision of the Arizona state real estate
commissioner on the claim of (name of claimant) is to pay $_________ from the real estate
recovery fund. A copy of that decision and order is enclosed.
Pursuant to section 32-2188, subsection I, Arizona Revised Statutes, all of your licenses and
license rights under title 32, chapter 20, Arizona Revised Statutes, will be terminated effective on
the date of the payment, and you will not be eligible to apply for reinstatement of any of those
licenses until you have satisfied the underlying judgment and reimbursed the real estate recovery
fund for this payment, including interest at the prevailing legal rate.
If you desire a judicial review of the commissioner's decision and order or the termination of your
licenses and license rights, you may petition the superior court, in the county in which the
judgment that is the basis of this claim was rendered, for a judicial review. To be timely, you must
file the petition with the court within 30 calendar days after receiving this notice.”

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32-2188.05. Claimant's right to appeal denial of claim; service of notice of appeal; response;
failure to file response
A. A claimant whose application is denied pursuant to section 32-2188.04 may file within six months after
receiving notice of a denial of the claim a verified application in the court in which judgment was entered
in the claimant's favor for an order directing payment out of the real estate recovery fund based on the
grounds set forth in the claimant's application to the commissioner.
B. The claimant must serve a copy of the verified application on the commissioner and on the judgment
debtor and file a certificate or affidavit of service with the court. Service on the commissioner shall be
made by certified mail addressed to the commissioner. Service on a judgment debtor shall be made
according to section 32-2188.01 and shall include the following notice:
Notice
An application has been filed with the court for a payment from the real estate recovery fund that was
previously denied by the Arizona state real estate commissioner.
If the court orders a payment from the real estate recovery fund, all of your licenses and license rights
under title 32, chapter 20, Arizona Revised Statutes, will be automatically terminated.
If you wish to defend in court against this claim, you must file a written response with the court within 30
calendar days after you are served with a copy of the application. If you fail to file a written response, you
waive your right to defend against the claim.
C. The commissioner and the judgment debtor each must file a written response within thirty calendar
days after being served with the application under subsection B of this section. The court shall thereafter
set the matter for hearing on the petition of the claimant. The court shall grant a request of the
commissioner for a continuance of as much as thirty calendar days and, on a showing of good cause by
any party, may continue the hearing for such time as the court considers to be appropriate.
D. At the hearing, the claimant must establish compliance with the requirements of section 32-2188.
E. If the judgment debtor fails to file a written response to the application, the commissioner may
compromise or settle the claim at any time during the court proceedings and, on joint petition of the
applicant and the commissioner, the court shall issue an order directing payment out of the real estate
recovery fund.
32-2189. Management of fund
A. The sums received by the commissioner pursuant to any provisions of this article shall be deposited,
pursuant to sections 35-146 and 35-147, in the real estate recovery fund and shall be held by the
commissioner in trust for carrying out the purposes of this article.
B. On notice from the commissioner, the state treasurer shall invest and divest monies in the fund as
provided by section 35-313, and monies earned from investment shall be credited to the fund.
C. Notwithstanding any other law, the commissioner may expend interest monies from the fund necessary
to increase public awareness of the fund, not to exceed fifty thousand dollars in any fiscal year.
32-2191. Commissioner's standing in court
The commissioner may enter an appearance, file an answer, appear at the court hearing, defend the
action or take whatever other action the commissioner considers appropriate on the behalf and in the
name of the real estate recovery fund and take recourse through any appropriate method of review on
behalf of, and in the name of, the real estate recovery fund.
32-2192. Subrogation of rights; collection
A. Before receiving payment from the fund, a claimant must complete and execute, as judgment creditor,
an assignment of judgment lien and notice of subrogation and assignment of rights to the claimant’s
judgment on a form provided by the department.
B. If the commissioner has paid from the real estate recovery fund any sum to the judgment creditor, the
commissioner shall be subrogated to all of the rights of the judgment creditor and the judgment creditor
shall assign all the right, title and interest in the judgment to the commissioner. The commissioner may
record the assignment of judgment lien and notice of subrogation and assignment of rights. Any amount
and interest so recovered by the commissioner on the judgment shall be deposited to the fund.
C. If the commissioner is subrogated to a claimant’s rights as judgment creditor, the claimant shall not file
a full or partial satisfaction of judgment without the commissioner’s prior written consent.

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D. The attorney general shall bring any actions to recover amounts paid from the fund including interest,
attorney fees and costs of collection pursuant to this chapter in the name of this state in the superior court
in the county in which the violation occurred or in a county in which the commissioner maintains an office.
A certified copy of a commissioner's order requiring payment from the fund 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, and may be
recorded, enforced or satisfied in a similar manner, as a judgment of the superior court. No filing fee is
required under this subsection.
32-2193. Waiver of rights
The failure of an aggrieved person to comply with all of the provisions of this article shall constitute a
waiver of any rights hereunder.
32-2193.01. Effect of article on disciplinary action
This article does not limit the authority of the commissioner to take disciplinary action against any
licensee for a violation of this chapter or of the rules adopted pursuant to this chapter. The repayment in
full of all obligations to the fund by any licensee does not nullify or modify the effect of any other
disciplinary proceeding brought pursuant to this chapter or the rules adopted pursuant to this chapter.
32-2193.02. Surety bond requirement; form; cancellation; effective date; certificate of deposit
A. In addition to any other fees assessed under this chapter, the commissioner may require that a real
estate or cemetery licensee or person applying for a license or renewal of a license issued to real estate
or cemetery brokers or salespersons under this chapter post a surety bond if any of the following apply:
1. The licensee or applicant has been found in violation of any of the provisions of this chapter or
the rules of the commissioner pertaining to this chapter.
2. The licensee or applicant has been convicted in a court of competent jurisdiction of a felony or
misdemeanor involving a transaction in real estate, or of which fraud is an essential element, or
arising out of the conduct of any business in real estate, securities or mail fraud, or securities
registration violations.
3. The licensee or applicant has had an administrative order entered against him or it by a real
estate regulatory agency or security regulatory agency.
B. The bond required by subsection A of this section shall be in a form acceptable to the commissioner
and shall be executed by the applicant or licensee as principal with a corporation duly authorized to
transact surety business in this state. Evidence of a surety bond shall be submitted to the commissioner
in accordance with rules adopted by the commissioner. The bond shall be in favor of this state and is
subject to claims solely for actual damages including reasonable attorney's fees suffered by persons
injured as described in section 32-2186. The amount and duration of the bond shall be as the
commissioner deems necessary for the protection of the public, but the principal amount of the bond shall
be not more than one hundred thousand dollars and its duration shall not exceed five years.
C. On receipt by the commissioner of notice to cancel a bond by any surety, the commissioner shall
immediately notify the licensee on the bond of the effective date of cancellation of the bond and the
licensee shall furnish a like bond within thirty days after mailing of the notice by the commissioner or his
license shall be suspended. Notice to the licensee shall be by certified mail addressed to the licensee's
last address on file with the commissioner.
D. In lieu of posting a bond as set forth in this section, the applicant or licensee may post a certificate of
deposit with the commissioner in accordance with the provisions of subsections A and B of this section.

Article 6 Organization and Regulation of Cemeteries
32-2194. Exceptions
This chapter does not apply to any of the following:
1. Any religious corporation, church, religious society or denomination, a corporation sole
administering temporalities of any church or religious society or denomination, or any cemetery
organized, controlled and operated by any of them.
2. A private or municipal cemetery.

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3. Any fraternal burial park not exceeding ten acres in area, established before July 2, 1963, in
which the sale of burial spaces is restricted exclusively to its members.
4. The superintendent of the Arizona pioneers' home and the Arizona pioneers’ home cemetery.
32-2194.01. Notice to commissioner of intention to sell cemetery property; exceptions; restrictions
A. Before offering cemetery plots for sale, the owner or agent shall notify the commissioner in writing and
the notice shall contain:
1. The name and address of the owner. If the holder of any ownership interest in the cemetery is
other than an individual, such as a corporation, partnership or trust, a statement naming the type
of legal entity and listing the interest and the extent of such interest of each principal in the entity.
For the purposes of this paragraph, "principal" means any person or entity having a ten per cent
or more financial interest or, if the legal entity is a trust, each beneficiary of the trust holding a ten
per cent or more beneficial interest.
2. The legal description and area of the lands.
3. A true statement of the condition of the title to the land, including all encumbrances on the land.
4. The terms and conditions on which it is intended to dispose of the land, together with copies of
any real estate sales contract, conveyance, lease, assignment or other instrument intended to be
used, and other information the owner or agent desires to present.
5. A map of the cemetery which has been filed in the office of the county recorder in the county in
which the cemetery is located.
6. A comprehensive statement describing the land on and the locality in which the cemetery is
located.
7. A true statement of the use or uses for which the proposed cemetery will be offered.
8. A true statement of the provisions, if any, limiting the use of the plots in the cemetery, together
with copies of any restrictive covenants affecting all or part of the cemetery.
9. The name and business address of the designated broker selling within this state plots in the
cemetery. If the designated broker is changed the cemetery shall advise the department in writing
without the requirement of an amended filing.
10. A true statement of the approximate amount of indebtedness which is a lien on the cemetery
or any part of the cemetery and which was or will be incurred to pay for the construction of any
on-site or off-site improvement or other facilities.
11. A true statement or reasonable estimate, if applicable, of the amount of any indebtedness
which has been or is proposed to be incurred by an existing or proposed special district, entity,
taxing area or assessment district within the boundaries of which the cemetery or any part of the
cemetery is located and any amounts which are to be obtained by ad valorem tax or assessment,
or by a special assessment or tax on the cemetery or any part of the cemetery.
12. Proof of financial responsibility for completing the cemetery and its related facilities for its
initial development.
13. A true statement of provisions made for financing any related facilities to be included. The
statement shall include evidence of assurances for delivery of such facilities and a statement of
the provisions, if any, for the continued maintenance of such facilities.
14. A true statement that the cemetery is not subject to any known flooding or drainage hazards.
15. A true statement of the nature of any improvements to be installed in the developed portion of
the cemetery, the estimated schedule for completion and the estimated costs related to such
improvements which shall be borne by the developed portion of the cemetery.
16. A true statement of the availability of department of health services approved water and
sewage disposal facilities and other public utilities including electricity, gas and telephone
facilities in the cemetery, the estimated schedule for their installation and the estimated costs
related to such facilities and utilities which shall be borne by the cemetery.
17. If the subdivider is a subsidiary corporation, a true statement identifying the parent
corporation and any cemeteries in this state in which the parent or any of its subsidiaries are or
have been involved in the last five years.
18. Such other information and such other documents as the commissioner may reasonably
require.
19. If the cemetery has been previously licensed in this state and the ownership or control of the
cemetery has transferred, a statement from a certified public accountant certified pursuant to
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chapter 6 of this title, showing that all required funds have been deposited in the irrevocable trust
fund and that only lawful withdrawals were made. An audit that meets generally accepted
accounting standards shall be used by the certified public accountant to prepare the statement
required by this paragraph.
B. The commissioner may require the owner or agent to supplement the notice of intention to develop a
cemetery and may require the filing of periodic reports to update the information contained in the original
notice of intention to develop a cemetery.
C. The conveyance of a plot in a cemetery does not limit the right of the purchaser or the purchaser's
representative to appear and testify before any public body regarding changes or other official acts
affecting the cemetery property. All contractual provisions which conflict with this subsection are deemed
to be against public policy.
D. The commissioner by special order may exempt from any one or all of the provisions of this article
certain cemeteries otherwise required to comply with this article on written petition and on a showing by
the petitioner, satisfactory to the commissioner, that compliance with this article is not essential to the
public interest or for the protection of buyers by reason of the special characteristics of the cemetery.
32-2194.02. Examination by commissioner; fee
Before cemetery plots are offered for sale the commissioner shall examine the cemetery and shall make
public his findings. The total cost of travel and subsistence expenses incurred by the department in the
examination, in addition to the initial filing fee provided for in this section, shall be borne by the owner of
the cemetery or his agent, on the basis of actual cost to the department. An initial filing fee of five hundred
dollars or such lesser fee as determined by the commissioner shall accompany the written notification
required in section 32-2194.01.
32-2194.03. Issuance or denial of certificate of authority; voidable sale; order prohibiting sale;
investigations by commissioner; public hearings; summary orders
A. After examination of a cemetery application, the commissioner, unless there are grounds for denial,
shall issue a certificate of authority authorizing the sale in this state of cemetery plots within the cemetery.
The commissioner shall notify the state board of funeral directors and embalmers when the commissioner
issues a certificate of authority pursuant to this section.
B. The commissioner may deny issuance of a certificate of authority on any of the following grounds:
1. Failure to comply with any of the provisions of this article or the rules of the commissioner
pertaining to this article.
2. The sale of plots within the cemetery would constitute misrepresentation to or deceit or fraud of
the purchasers.
3. The applicant has procured or attempted to procure a certificate of authority under the
provisions of this chapter for itself or another by fraud, misrepresentation or deceit or by filing an
original or renewal application which is false or misleading.
4. Inability to deliver title or other interest contracted for.
5. Inability to demonstrate that adequate financial or other arrangements acceptable to the
commissioner have been made for installation of all off-site and other cemetery facilities.
6. Failure to make a showing that the plots can be used for the purpose for which they are
offered.
7. Failure to provide in the contract or other writing the use or uses for which the plots are offered,
together with any covenants or conditions relative to such plots.
8. Failure to include in the contract the disclosure provisions required as provided by section 322194.04.
9. The owner, agent, officer, director or partner, trust beneficiary holding ten per cent or more
beneficial interest or, if a corporation, any stockholder owning ten per cent or more of the stock in
such corporation has:
(a) Been convicted of a felony or misdemeanor involving fraud or dishonesty or involving
conduct of any business or a transaction in real estate, cemetery property, time-share
intervals or membership camping campgrounds or contracts.
(b) Been permanently or temporarily enjoined by order, judgment or decree from
engaging in or continuing any conduct or practice in connection with the sale or purchase
of real estate or cemetery property, time-share intervals, membership camping contracts
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or campgrounds, or securities or involving consumer fraud or the racketeering laws of this
state.
(c) Had an administrative order entered against the applicant by a real estate regulatory
agency or security regulatory agency.
(d) Had an adverse decision or judgment entered against the applicant involving fraud or
dishonesty or involving the conduct of any business in or a transaction in real estate,
cemetery property, time-share intervals or membership camping campgrounds or
contracts.
(e) Disregarded or violated any of the provisions of this chapter or the rules of the
commissioner pertaining to this chapter.
(f) Participated in, operated or held an interest in any entity to which subdivision (b), (c),
(d) or (e) applies.
10. Failure to satisfy the commissioner that sufficient land has been dedicated for the operation of
the cemetery to make it financially secure with respect to the trust fund requirements of this
article.
C. A cemetery owner or operator shall not sell or offer for sale any plots without first obtaining a certificate
of authority as provided in this section. Any sale of plots before the issuance of the certificate of authority
is voidable by the purchaser. An action by the purchaser to void such transaction shall be brought within
three years of the date of execution of the purchase agreement by the purchaser. In any such action, the
prevailing party is entitled to reasonable attorney fees as determined by the court.
D. An applicant objecting to the denial of a certificate of authority by the commissioner, within thirty days
after receipt of the order of denial, may file a written request for a hearing. The commissioner shall hold
the hearing within twenty-five days after the request unless the party requesting the hearing requests a
postponement. If the hearing is not held within twenty-five days after the request for a hearing is received,
plus the period of any such postponement, or if a proposed decision is not rendered within forty-five days
after submission, the order of denial shall be rescinded and a certificate of authority shall be issued.
E. On the commissioner's own motion or if the commissioner has received a complaint and has
satisfactory evidence that the cemetery owner or agent is violating any provision of this article or the rules
of the commissioner or has engaged in any unlawful practice as defined in section 44-1522 with respect
to the sale of cemetery plots or deviated from the conditions under which the certificate of authority was
issued, the commissioner may investigate the cemetery project and examine the books and records of
the cemetery owner or agent. For the purpose of examination, the cemetery owner or agent shall keep
and maintain records of all sales transactions and monies the cemetery owner or agent received at the
broker's main office or at an off-site storage location in this state if the owner or agent provides prior
written notification of the street address of the off-site storage location to the department. The cemetery
owner or agent shall make the records accessible to the commissioner on reasonable notice and
demand.
F. The commissioner on the commissioner's own motion or if the commissioner has received a complaint
and has satisfactory evidence that any of the grounds exist as provided in subsection B of this section or
that any person has engaged in any unlawful practice as defined in section 44-1522 with respect to the
sale of cemetery plots or has deviated from the conditions under which the certificate of authority was
issued, before or after the commissioner issues the certificate of authority as provided in this section, may
conduct an investigation of such matter, issue a summary order as provided in section 32-2157, or hold a
public hearing and, after the hearing, may issue such order or orders as the commissioner deems
necessary to protect the public interest and ensure compliance with the law, rules or certificate of
authority, or the commissioner may bring an action in any court of competent jurisdiction against the
person to enjoin the person from continuing such violation or engaging in a violation or doing any act or
acts in furtherance of a violation. The court may make such orders or judgments, including the
appointment of a receiver, as may be necessary to prevent the use or employment by a person of any
unlawful practices or which may be necessary to restore to any person in interest any monies or property,
real or personal, which may have been acquired by means of any practice declared to be unlawful in this
article.
G. If it appears to the commissioner that a person has engaged in or is engaging in a practice declared to
be unlawful by this article and that such person is concealing assets or has made arrangements to
conceal assets or is about to leave this state, the commissioner may apply to the superior court, without
notice, for an order appointing a receiver of the assets of such person or for a writ of ne exeat, or both.
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H. The court on receipt of an application for the appointment of a receiver or for a writ of ne exeat, or
both, shall examine the verified application of the commissioner and such other evidence that the
commissioner may present to the court. If satisfied that the interests of the public require the appointment
of a receiver or the issuance of a writ of ne exeat without notice, the court shall issue an order appointing
the receiver or issue the writ, or both. If the court determines that the interests of the public will not be
harmed by the giving of notice, the court shall set a time for a hearing and require that such notice be
given as the court deems satisfactory.
I. If the court appoints a receiver without notice, the court shall further direct that a copy of the order
appointing a receiver be served on the person engaged in or engaging in a practice declared to be
unlawful under this article by delivering such order to the last address of the person which is on file with
the real estate department. The order shall inform the person that he has the right to request a hearing
within ten days after the date of the order, and if requested, the hearing shall be held within thirty days
after the date of the order.
32-2194.04. Contract disclosures; contract disclaimers
A. In all agreements and contracts for the sale of cemetery plots from a cemetery, a broker or agent shall
clearly and conspicuously disclose the following information:
1. The nature of the document, including grave site designation.
2. The nature of the cemetery, whether endowed or not under the provisions of this article.
3. That the cemetery operator has received a certificate of authority from the department pursuant
to section 32-2194.03 and that these records are available for examination at the department at
the request of the purchaser.
4. A provision that all cemetery improvements for the area developed as defined in the application
shall be completed by the date indicated in the application.
5. Whether the purchaser is subject to a fee for the following known services or goods associated
with future plot use:
(a) Opening or closing interment.
(b) A marker, with or without a setting.
(c) A vault liner purchased with the grave site.
6. Whether a marker or vault may be purchased separately from another vendor.
7. The policy of the cemetery regarding cancellations of contracts, including whether the
cemetery issues refunds under canceled contracts.
B. An agreement or contract which fails to make the disclosures required in subsection A of this section is
unenforceable against the purchaser.
32-2194.05. Advertising material; contents; order prohibiting use
A. Within ten days after request by the commissioner, the cemetery owner or agent shall file with the
commissioner a copy of any promotional and advertising material of any kind used directly or indirectly in
connection with the sale of cemetery plots or any material changes in the material.
B. No advertising, communication or sales literature of any kind, including oral statements by
salespersons or other persons, may contain:
1. Any untrue statement of material fact or any omission of material fact which would make the
statement misleading in light of the circumstances under which the statement was made.
2. Any statement, representation or pictorial presentation of proposed improvements or
nonexistent scenes without clearly indicating that the improvements are proposed and the scenes
do not exist.
C. All advertising and sales literature shall be consistent with the information contained in the notice of
intention pursuant to section 32-2194.01 and shall otherwise comply with the rules of the commissioner.
D. If it appears to the commissioner that any person is or has engaged in advertising or promotional
practices in violation of this article, the commissioner may hold a hearing as a contested case under the
provisions of title 41, chapter 6, article 10 and issue such order or orders as he deems necessary to
protect the public interest or the commissioner may bring an action in any court of competent jurisdiction
against the person to enjoin the person from continuing the violation.
E. The commissioner may adopt rules and guidelines necessary to protect the public interest and to
assure that all advertising and promotional practices with respect to land subject to the provisions of this
article are not false or misleading.
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F. It is unlawful for any owner or agent of a cemetery or other person with intent directly or indirectly to
sell plots subject to the provisions of this article to authorize, use, direct or aid in any advertising,
communication, sales literature or promotional practice which violates this section.
G. Nothing in this section applies to the owner or publisher of a newspaper, magazine or other publication
of printed matter in which such advertisement appears or to the owner or operator of a radio or television
station which disseminates such advertisement if the owner, publisher or operator has no knowledge of
the intent, design or purpose of the advertiser.
32-2194.06. Records of transactions
A. Cemeteries shall keep on file records of all documents in connection with all cemetery plot transactions
handled by or through them. The records shall include but are not limited to:
1. All sales contracts.
2. Sales contract payment ledgers.
3. Certificates of burial rights.
4. All ledgers or books showing all receipts, disbursements or adjustments.
5. Records of plats and maps.
6. Such other information as the commissioner may reasonably require.
B. Each cemetery broker is responsible for maintenance of all documents used in connection with all
cemetery plot transactions while in the employment of a cemetery. The records shall be open at all
reasonable times for inspection by the commissioner or the commissioner's representatives. The records
of each transaction shall be kept by the cemetery for a period of five years after payment in full of the
transaction at the broker's main office or at an off-site storage location in this state if the owner or agent
provides prior written notification of the street address of the off-site storage location to the department.
32-2194.07. Recording of actions
A. If the commissioner issues a cease and desist order, obtains a court order enjoining further sales,
issues an order of prohibition or suspends approval of a cemetery, the action shall be recorded in the
office of the county recorder in any county in which the cemetery property is located.
B. If any of the orders which require recording in subsection A are revoked, an order of release shall be
recorded in the same manner.
32-2194.08. Administrative penalties
A. Any cemetery owner, operator, broker or salesman subject to the jurisdiction of the department who
violates any provision of this chapter or any rule or order promulgated by the commissioner, who deviates
substantially from the provisions under which a certificate of authority was issued or who engages in any
unlawful practices defined in section 44-1522 with respect to the sale of cemetery plots may be assessed
a civil penalty by the commissioner, after a hearing, in an amount of not to exceed one thousand dollars
for each infraction.
B. Actions to recover penalties pursuant to this section shall be brought by the attorney general in the
name of this state in the superior court in the county in which the violation occurred or in a county in
which the commissioner maintains an office.
32-2194.09. Civil liabilities
A. If any part of the notice of intention filed pursuant to section 32-2194.01 contains an untrue statement
of a material fact or omits a material fact required to be stated in such notice, the owner or agent is liable
as provided in this article to any person who acquires a plot in the cemetery.
B. A cemetery owner, operator, broker or salesman who sells a cemetery plot in violation of this article is
liable to the purchaser of such plot as provided in this article.
C. It is unlawful for any cemetery owner, operator, broker or salesman in selling or offering to sell any
cemetery plot to:
1. Employ any device, scheme or artifice to defraud.
2. Obtain money or property by means of a material misrepresentation with respect to any
information included in the notice of intention or the certificate of authority with respect to any
other information pertinent to the plot on which the purchaser relies.
3. Engage in any transaction, practice or course of business which operates or would operate as
a fraud or deceit on a purchaser.
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D. Damages in any suit brought pursuant to this section shall be the difference between the amount paid
for the plot together with the reasonable cost of improvements to such plot and whichever of the following
is the smallest:
1. The value of the plot and improvements as of the time the suit was brought.
2. The price at which the plot was disposed of in a bona fide market transaction before suit.
3. The price at which the plot was disposed of in a bona fide market transaction after suit was
brought but before judgment.
E. In an action in which a violation of this section is established the purchaser is also entitled to recover
reasonable attorney fees as determined by the court. If a violation is not established, the court, in its
discretion, may award reasonable attorney fees to the defendant.
F. Every person who becomes liable to make any payment pursuant to this section may recover
contribution as in cases of contract from any person who, if sued separately, would have been liable to
make the same payment.
G. In no case shall the amount recoverable pursuant to this section exceed the sum of the purchase price
of the plot, the reasonable cost of improvements installed by the purchaser and reasonable court costs
and attorney fees.
H. Nothing contained in this section precludes any other remedies that may exist at law or in equity.
I. No action may be maintained to enforce any liability created pursuant to subsection A or B of this
section unless brought within one year after the discovery of the untrue statement or the omission or after
such discovery should have been made by the exercise of reasonable diligence. No action may be
maintained to enforce any liability created pursuant to subsection C of this section unless brought within
two years after the violation on which it is based. In no event shall any such action be brought by a
purchaser more than three years after the sale to the purchaser.
32-2194.10. Change of cemetery plan after approval by commissioner; notice; fee
A. It is unlawful for any owner or agent, after submitting to the commissioner the plan under which
cemetery plots are to be offered for sale and securing his approval, to change the plan materially without
first notifying the commissioner in writing of the intended change. Material changes covered by this
section shall be prescribed in the rules of the commissioner. On receipt of any notice of a material
change, the commissioner, if he determines such action to be necessary for the protection of purchasers,
may suspend his approval of sale pending amendment of the notice as required by section 32-2194.01.
B. A filing fee of one-half of the fee that was charged for the initial certificate of authority pursuant to
section 32-2194.02 but not less than two hundred fifty dollars shall accompany any amendment required
by subsection A of this section.
32-2194.11. Delivery of clear title by cemetery of cemetery plots
Cemetery plots shall not be sold which are subject to liens.
32-2194.12. Permanent access to cemetery land
No cemetery may be sold without provision for permanent access.
32-2194.13. Deposit of fees
All fees and earned expense collected under this chapter shall be deposited in the state general fund
unless otherwise prescribed by law.
32-2194.14. Cemetery brokers; disclosures
Before offering cemetery property or interment rights for sale in a licensed cemetery, a cemetery broker
who is not a designated broker for the cemetery shall obtain and comply with all of the licensed
cemetery's rules and shall disclose to the purchaser all fees and time frames of transfer and recordation
of interment rights or deeds on the cemetery records.
32-2194.15. Jurisdiction
The commissioner shall not be denied jurisdiction over any person subject to the provisions of this article
because of similar jurisdiction over such person by any other agency or the applicability to such person of
any rule prescribed pursuant to any other provision of law.

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32-2194.16. Sale of undeveloped cemetery property
With regard to cemetery property which is undeveloped, development must commence for that particular
section or building within five years after the date of the first sale of a plot.
32-2194.17. Transaction of cemetery business
Only a corporation or a limited liability company duly organized to conduct cemetery business may
transact cemetery business pursuant to this article.
32-2194.18. Application for authority to open and operate cemeteries
Before a corporation may engage in or transact any business of a cemetery it must file an application for
a certificate of authority with the commissioner. Such application must show that the corporation owns or
is actively operating a cemetery in this state which is subject to the provisions of this chapter or that the
applicant is in a position to commence operating a cemetery.
32-2194.19. Investigation of applicant before granting of certificate of authority where needed
Upon receipt of an application for a certificate of authority to operate a cemetery, the commissioner shall
cause an investigation to be made of the physical status, plans, specifications and financing of the
proposed cemetery, the character of the applicant, including its officers, directors, shareholders or
members, and any other qualifications required of the applicant under this article. If the commissioner
finds that the applicant has complied with all the provisions of this article and further finds that the area in
which the proposed cemetery is to be located is not already adequately served, then he shall grant the
certificate of authority.
32-2194.20. Right of cemetery to make rules and regulations
Any cemetery subject to the provisions of this article may make, adopt, amend, add to, revise, or modify
and enforce rules and regulations for the use, care, control, restriction and protection of all or any part of
its cemetery, provided these rules and regulations are not contrary to law. These rules and regulations
shall be on file with the real estate commissioner and shall at all times be posted in a conspicuous place
in the offices of the cemetery or at some other place within the cemetery as may be convenient for
inspection.
32-2194.21. Survey of property; maps and plats
Every cemetery, from time to time as its property may be required for interment purposes, in addition to
the other requirements of the article, shall:
1. In case of land, survey and subdivide it into sections, blocks, plots, avenues, walks or other
subdivisions, and make a good and substantial map or plat showing the sections, plots, avenues,
walks or other subdivisions, with descriptive names or numbers.
2. In case of a mausoleum, or crematory and columbarium, it shall make a good and substantial
map or plat on which shall be delineated the sections, halls, rooms, corridors, elevations, and
other divisions, with descriptive names or numbers.
32-2194.22. Filing maps and declaration of dedication
The cemetery, in addition to filing the map or plat in the office of the county recorder as required by
subdivisions, shall also file for record in the county recorder's office, a written declaration of dedication of
the property delineated on the map or plat dedicating the property exclusively to cemetery purposes.
32-2194.23. Nonapplication of law against perpetuities
Dedication to cemetery purposes pursuant to this chapter is not invalid as violating any laws against
perpetuities, but is expressly permitted and shall be deemed to be in respect for the dead, a provision for
the interment of human remains, and a duty to, and for the benefit of, the general public.
32-2194.24. Trust fund to be established before certificate of authority granted
No certificate of authority shall issue to a corporation or limited liability company organized for the
purpose of maintaining and operating a cemetery unless the articles of incorporation or organization
certify to the establishment of an irrevocable trust fund for maintenance and operation in accordance with
the provisions of this article, and there is attached to the articles of incorporation or organization the
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written instrument establishing the irrevocable trust fund accompanied by the receipt of the trustee
designated in the written instrument for the minimum care fund hereinafter provided. Any cemetery that
has been operating before January 1, 1998 and that was not previously required to establish an
irrevocable trust fund shall not be required to establish an irrevocable trust fund unless a material change
is made to the plan under which cemetery plots are offered for sale.
32-2194.25. Trust fund to be established before existing cemetery can advertise as endowed-care
cemetery
After the effective date of this article, no owner of a cemetery in existence at the effective date of this
article, who previous to such date has not sold or contracted to sell lots in such cemetery with a provision
for perpetual or endowed care, shall thereafter advertise or otherwise hold out to the public that such
cemetery or any individual lot therein is entitled to perpetual or endowed care unless and until the owner
shall have established a trust fund for the care of the cemetery, as provided by this article.
32-2194.26. Initial deposit required in endowment-care fund
No corporation hereafter organized for the operation of a perpetual or endowed-care cemetery nor any
owner of a cemetery not previously operating as a perpetual or endowed-care cemetery shall advertise or
sell plots in such cemetery under the representation that the cemetery or any individual plot therein is
entitled to perpetual or endowed care until there has been established an irrevocable trust fund to provide
for such care in accordance with the following schedule:
1. Cemeteries located in an area having a population of less than ten thousand persons within a
radius of fifteen miles from the center of such cemetery must deposit with the trustee the sum of
ten thousand dollars in cash.
2. Cemeteries located in an area having a population of ten thousand or more persons but less
than fifteen thousand persons within a radius of fifteen miles from the center of such cemetery
must deposit with the trustee the sum of fifteen thousand dollars in cash.
3. Cemeteries located in an area having a population of fifteen thousand or more persons but less
than twenty-five thousand persons within a radius of fifteen miles from the center of such
cemetery must deposit with the trustee the sum of twenty thousand dollars in cash.
4. Cemeteries located in an area having a population of twenty-five thousand or more persons,
but less than fifty thousand persons within a radius of fifteen miles from the center of such
cemetery must deposit with the trustee the sum of thirty thousand dollars in cash.
5. Cemeteries located in an area having a population of fifty thousand or more persons within a
radius of fifteen miles from the center of such cemetery must deposit with the trustee the sum of
fifty thousand dollars in cash.
32-2194.27. Restrictive use of income from endowed-care fund; obligation
The irrevocable trust fund established pursuant to section 32-2194.26 shall be evidenced by an
instrument in writing and shall contain the following provisions:
1. There shall be designated a trustee for the endowed-care fund that is a financial institution
authorized to do business in this state and authorized to act as trustee by the laws of this state for
such investments. The trustee must be one in which no officer, director or owner of the cemetery
is financially interested in any way.
2. The principal of the trust fund shall remain permanently intact, and only the income or the
unitrust amount specified in section 14-11014 or 14-11015 shall be expended. It is the intent of
this section that the income or unitrust amount of the fund shall be used solely for the care of
plots or other burial spaces sold to third persons with a provision for perpetual or endowed care
and the care of such other portions of the cemetery immediately surrounding such plots as may
be necessary to preserve the beauty and dignity of the plots sold. The fund or its income shall
never be used for the development, improvement or embellishment of unsold portions of the
cemetery so as to relieve the owner of the cemetery of the ordinary cost incurred in preparing
such property for sale.
3. A financial institution acting as a trustee does not have a legal obligation to operate a cemetery
other than providing trust fund income to the receiver or successor of a cemetery unable to meet
its perpetual care obligations. A trustee, in its sole discretion and without the approval of the

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court, may convert the trust to a total return unitrust and administer the endowed-care fund as
provided in section 14-11014.
32-2194.28. Deposit in endowed-care fund from sales
A. In addition to establishing a trust fund as required by this article, every perpetual or endowed-care
cemetery shall deposit into its trust fund according to the following schedule for each sale within thirty
days after the contract for the purchase of cemetery property is paid in full:
1. Two dollars seventy-five cents per square foot for each grave.
2. Thirty-six dollars for each niche.
3. One hundred twenty dollars for each crypt.
B. In addition to the deposits required in subsection A of this section, a cemetery may deposit in its trust
fund up to fifteen per cent of the gross sales price of a grave, niche or crypt.
C. This section applies to every cemetery which in any way represents that it is a perpetual or endowedcare cemetery, regardless of whether it operated as a perpetual or endowed-care cemetery before July 2,
1963.
D. In the case of a perpetual or endowed-care cemetery which was in operation as a perpetual or
endowed-care cemetery before July 2, 1963, the fund created by the deposits which subsection A of this
section requires is subject to the same restrictions to which the trust funds required by sections 322194.24 and 32-2194.25 are subject.
32-2194.29. Posting of signs by cemeteries
Each cemetery shall post in a conspicuous place in the office or offices where sales are conducted and in
a conspicuous place at or near the entrance of the cemetery or its administration building, and readily
accessible to the public, a legible sign in lettering of a size and style to be approved by the real estate
commissioner indicating either the cemetery is an endowed or a nonendowed cemetery.
32-2194.30. Restriction on use of care funds
Endowed-care funds shall not be used for any purpose other than to provide for the care of burial spaces
as prescribed in section 32-2194.27. In investing these funds, the trustee shall exercise the judgment and
care of a prudent investor under the circumstances then prevailing, not in regard to speculation, but in
regard to the permanent disposition of their funds, considering the probable income or unitrust amount as
well as the probable safety of their capital. Within the limitations of the foregoing standard, and subject to
any express provisions or limitations contained in any particular trust instrument, a trustee is authorized to
acquire every kind of property, real, personal or mixed, and every kind of investment, specifically
including corporate obligations of every kind and stocks, preferred or common, that prudent investors
acquire for their own account.
32-2194.31. Crematories
Crematories which are licensed as part of a cemetery under this chapter shall comply with the
requirements of chapter 12, article 6 of this title and rules adopted pursuant to that article.
32-2194.32. Opening and closing of burial places
If any grave, mausoleum, niche or other place used or intended to be used for the burial of human
remains is located in a cemetery, only a person employed or designated by the cemetery may open or
close the grave, mausoleum, niche or other place used or intended to be used for the burial of human
remains, subject to the rules established by the cemetery.
32-2194.33. Cemetery property owners; address notification reclamation; abandoned cemetery
plot
A. For the purposes of this section, an owner of cemetery property in any cemetery licensed under this
chapter shall keep the cemetery informed in writing of the owner's current residence address. Before
initiating a notice of abandonment, the cemetery shall notify each cemetery property owner by letter at the
owner's last known address and notify all future cemetery property owners, in the contract for sale and
the certificate of ownership, of the requirement to keep the cemetery informed in writing of their current
residence address.

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B. There is a presumption that cemetery property in any cemetery licensed under this chapter has been
abandoned when an owner of unused cemetery property has failed to provide the cemetery with a current
residence address for a period of fifty consecutive years and as a result the cemetery is unable to
communicate by certified mail with the owner of the unused cemetery property. There is not a
presumption of abandonment if either of the following occurs:
1. Cemetery property held in common ownership is adjoining whether in a grave space, plot,
mausoleum, columbarium or other place of interment and is used within common ownership.
2. Any type of memorial marker has been placed on or attached to the cemetery property.
C. On the occurrence of a presumption of abandonment as prescribed by subsection B of this section, a
cemetery may file with the department a certified notice attesting to the abandonment of the cemetery
property. The notice shall do the following:
1. Describe the cemetery plot certified to have been abandoned.
2. Set forth the name of the last known owner of the cemetery plot or, if the owner is known to the
cemetery to be deceased, the names, if known to the cemetery, of claimants that are heirs at law,
next of kin or specific devisees under the will of the owner.
3. Describe the failure of the owner or claimants as prescribed by paragraph 2 of this subsection
to keep the cemetery informed of the owner's current residence address for a period of fifty
consecutive years or more.
4. Certify that cemetery property has not been included that is held in common ownership with
any abandoned cemetery property as prescribed by subsection B of this section and that a
memorial marker has not been placed on or attached to the cemetery property.
D. Irrespective of diversity of ownership of the cemetery property, a cemetery may include in its
certification cemetery properties of various types.
E. The cemetery shall publish a notice of the approved abandoned cemetery property once each week for
two consecutive weeks in a newspaper of general circulation in the county in which the cemetery property
is located.
F. After one hundred twenty days from the final publication of the notice as provided in subsection E of
this section, if there has been no notification of the address of the current owner, the cemetery shall have
the right to resell the cemetery property and transfer the ownership of the cemetery property as provided
in the cemetery's certificate of authority.
G. On the sale of each lot, grave, niche or crypt reclaimed pursuant to this section, the cemetery shall
contribute to the endowed-care trust fund the amount currently required by section 32-2194.28.
H. On showing of evidence of right of ownership, persons or their heirs who were owners of cemetery
property that was sold under this section shall have the right at any time to obtain equivalent cemetery
property in the cemetery without additional charge. If no cemetery property is desired, the persons or
their heirs may obtain and recover the amount originally paid to the cemetery for the cemetery property.
I. The cemetery shall make available cemetery property equal to ten per cent of the abandoned cemetery
property sold under this section for the use of persons or their heirs who were owners of cemetery
property that was sold under this section and who have the right at any time to obtain cemetery property
in the cemetery under this section.
J. Persons who purchase cemetery property reclaimed pursuant to this section shall have the right to sell,
alienate or otherwise transfer the cemetery property subject to and in accordance with the rules of the
cemetery and payment of any applicable transfer fee.

Article 7 Sale of Unsubdivided Lands
32-2195. Notice to commissioner of intention before offering for sale or lease of unsubdivided
land; definition
A. Prior to the offering for sale or lease of unsubdivided land the owner or agent shall notify the
commissioner in writing of the owner's or agent's intention to offer such parcels for sale or lease.
B. The notice required by this section shall contain the following information:
1. The name and address of the owner. If the holder of any ownership interest in the land is other
than an individual, such as a corporation, partnership or trust, a statement naming the type of
legal entity and listing the interest and the extent of such interest of each principal in the entity.
For the purposes of this section, "principal" means any person or entity having a ten per cent or

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more financial interest or, if the legal entity is a trust, each beneficiary of the trust holding a ten
per cent or more beneficial interest.
2. The name and address of the agent.
3. The legal description and area of the lands.
4. A true statement of the condition of the title to the land, including all encumbrances thereon.
5. A true statement of the terms and conditions under which such lands are to be offered to the
public.
6. A statement of the use or uses for which the land will be offered or a statement that it is offered
for no specific use.
7. A true statement of the provisions made for permanent access.
8. A true statement setting out the availability of water or lack thereof.
9. A true statement of the availability to the land of sewage disposal facilities and other public
utilities including water, electricity, gas and telephone facilities.
10. A true statement or reasonable estimate, if applicable, of the amount of any indebtedness
which has been or is proposed to be incurred by an existing or proposed special district, taxing
area or assessment district within the boundaries of which the unsubdivided lands are located,
and which is to pay for the construction or installation of any improvements to that land.
11. A true statement as to whether all or any portion of the unsubdivided land is located in an
open range or area in which livestock may roam at large under the laws of this state and what
provisions, if any, have been made for the fencing of the unsubdivided land to preclude livestock
from roaming within such land.
12. If the owner or agent is a subsidiary corporation, a true statement identifying the parent
corporation and any of the following in which the parent or any of its subsidiaries are or have
been involved within the past five years:
(a) Any subdivision in this state.
(b) Any subdivision, wherever located, for which registration is required pursuant to the
federal interstate land sales full disclosure act.
(c) Any subdivision, wherever located, for which registration would have been required
pursuant to the federal interstate land sales full disclosure act but for the exemption for
subdivisions whose lots are five acres or more in size.
13. A true statement identifying all other subdivisions, designated in paragraph 12, in which any
of the following are or, within the last five years, have been directly or indirectly involved:
(a) The holder of any ownership interest in the land.
(b) The agent.
(c) Any principal or officer in the holder.
14. A true statement as to whether all or any portion of the unsubdivided land is located in
territory in the vicinity of a military airport or ancillary military facility as defined in section 28-8461,
in territory in the vicinity of a public airport as defined in section 28-8486, on or after July 1, 2001,
in a high noise or accident potential zone as defined in section 28-8461 or on or after July 1 of the
year in which the land becomes located in a high noise or accident potential zone. The statement
required pursuant to this paragraph does not require the amendment or refiling of any notice filed
before July 1, 2001 or before July 1 of the year in which the land becomes located in a high noise
or accident potential zone.
15. Such other information and such other documents and certifications as the commissioner may
reasonably require for the protection of the public.
C. Copies of original promotional and advertising material to be used with such offering shall be attached
to the notice.
D. It shall be unlawful for any owner or agent to make any offerings regulated by this section without the
written authorization of the commissioner. The commissioner shall issue a public report thereon and
require a copy of the public report to be furnished to each offeree at the time of such offering.
E. It shall be unlawful to offer any lands regulated by this article without provisions having been made for
permanent access over terrain on which roads could be established for conventional motor vehicles
unless such provision is waived by the commissioner.
F. Satisfactory proof or evidence that access meets the requirements of subsection E of this section shall
be furnished to the department in a report by a licensed engineer or land surveyor of this state.

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G. The commissioner may terminate any authorization issued upon the grounds and in the manner set
out in section 32-2183.
H. If the director of water resources has issued a water availability report, the state real estate
commissioner shall require that all promotional material and contracts for the sale of such unsubdivided
lands adequately display the director of water resources' report or a brief summary of the results prepared
by the developer and approved by the real estate commissioner. If no report has been prepared by the
director of water resources and the availability of water is unknown, the real estate commissioner shall
require that all promotional material and contracts adequately display that no report has been prepared
and that the availability of water is unknown.
I. Neither any real estate sales contract, conveyance, lease, assignment or other instrument to transfer
any interest in unsubdivided land nor any covenant or restriction affecting real property shall contain any
provision limiting the right of any party to appear or testify in support of or opposition to zoning changes,
building permits or any other official acts affecting real property before a governmental body or official
considering zoning changes, building permits or any other official acts affecting real property, whether
such property is located within or outside of the boundaries of the unsubdivided land. All contractual
provisions which conflict with this subsection are declared to be contrary to public policy. Nothing
contained in this subsection shall prohibit private restrictions on the use of any real property.
32-2195.01. Power of commissioner to exempt certain unsubdivided land by special order
A. In his discretion the commissioner may exempt by special order from any one or all of the provisions of
this article certain unsubdivided land on written petition and on a showing by the petitioner, satisfactory to
the commissioner, that compliance with this article is not essential to the public interest or for the
protection of buyers by reason of the special characteristics of the unsubdivided land or the limited
character and duration of the offer for sale, lease or financing.
B. The special order pursuant to this section shall relate to specific land.
C. A petition filed under this section shall be accompanied by an initial fee of one hundred dollars. The
fees are not returnable irrespective of the nature of the action taken on the petition.
32-2195.02. Examination of unsubdivided land by commissioner; fee
The commissioner shall examine any unsubdivided land offered for sale or lease pursuant to this article,
and shall make public his findings. The total cost of travel and subsistence expenses incurred by the
department in the examination, in addition to the initial filing fee provided for in this section, shall be borne
by the owner of the unsubdivided land or his agent, or the subdivider of the project, on the basis of actual
cost to the department. An initial filing fee of five hundred dollars shall accompany the written notification
required in sections 32-2195 and 32-2195.10.
32-2195.03. Unsubdivided land reports; denial of issuance; order prohibiting sale or lease;
investigations; hearings; summary orders
A. Upon examination of unsubdivided land, the commissioner, unless there are grounds for denial, shall
prepare and issue to the owner or agent a public report authorizing the sale or lease of the unsubdivided
lands in this state. The report shall contain the data obtained in accordance with section 32-2195 and
any other information which the commissioner determines is necessary to implement the purposes of this
article. If any of the unsubdivided land is located within territory in the vicinity of a military airport or
ancillary military facility as defined in section 28-8461, the report shall include, in bold twelve point font
block letters on the first page of the report, the statements required pursuant to section 28-8484,
subsection A and, if the department has been provided a map prepared pursuant to section 28-8484,
subsection B, the report shall include a copy of the map. These report requirements do not require the
amendment or reissuance of any public report issued on or before December 31, 2001 or on or after
December 31 of the year in which the unsubdivided land becomes territory in the vicinity of a military
airport or ancillary military facility. The commissioner shall require the owner or agent to reproduce the
report and furnish each prospective buyer with a copy before the buyer signs an offer to purchase, taking
a receipt therefor.
B. Notwithstanding any provision of subsection A of this section, an owner may prepare a final public
report for use in the sale of unsubdivided lands as defined in section 32-2101, as follows:

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1. The owner shall prepare the public report and provide a copy of the report to the commissioner
with the submission of the notification required by sections 32-2195 and 32-2195.10 and shall
comply with all other requirements of this article.
2. An initial filing fee of five hundred dollars or an amended filing fee of two hundred fifty dollars
shall accompany the notification required by paragraph 1 of this subsection.
3. The department shall assign a registration number to each notification and public report
submitted pursuant to this subsection and shall maintain a database of all of these submissions.
The owner shall place the number on each public report.
4. The department shall determine within fifteen business days after the receipt of the notification
and public report whether the notification and public report are administratively complete. The
commissioner may either issue a certification that the notification and public report are
administratively complete or may deny issuance of the certification if it appears that the
application or project is not in compliance with all legal requirements, that the applicant has a
background of violations of state or federal law or that the applicant or project presents an
unnecessary risk of harm to the public.
5. An owner may commence sales or leasing activities as permitted under this article after
obtaining a certificate of administrative completeness from the commissioner.
6. Before or after the commissioner issues a certificate of administrative completeness, the
department may examine any public report, development or applicant that has applied for or
received the certificate. If the commissioner determines that the owner or development is not in
compliance with any requirement of state law or that grounds exist under this chapter to suspend,
deny or revoke a public report, the commissioner may commence an administrative action under
section 32-2154 or 32-2157. If the owner immediately corrects the deficiency and comes into full
compliance with state law, the commissioner shall vacate any action that he may have
commenced pursuant to section 32-2154 or 32-2157.
7. The department shall provide forms and guidelines for the submission of the notification and
public report pursuant to this section.
C. The commissioner may deny issuance of a public report on any of the following grounds:
1. Failure to comply with any of the provisions of this article or the rules of the commissioner
pertaining to this article.
2. The sale or lease would constitute misrepresentation to or deceit or fraud of the purchasers or
lessees.
3. Inability to deliver title or other interest contracted for.
4. Inability to demonstrate that adequate financial or other arrangements acceptable to the
commissioner have been made for installation of all streets, sewers, electric, gas and water
utilities, drainage, flood control and other similar improvements included in the offering.
5. Failure to make a showing that the parcels can be used for the purpose for which they are
offered.
6. Failure to provide in the contract or other writing the use or uses, if any, for which the parcels
are offered, together with any covenants or conditions relative to the parcel.
7. Failure to demonstrate that adequate financial arrangements have been made for any guaranty
or warranty included in the offering.
8. The owner or agent, officer, director or partner or trust beneficiary holding a ten per cent or
more beneficial interest, or, if a corporation, any stockholder owning ten per cent or more of the
stock in the corporation has:
(a) Been convicted of a felony or misdemeanor involving fraud or dishonesty or involving
conduct of any business or a transaction in real estate, cemetery property, time-share
intervals or membership camping campgrounds or contracts.
(b) Been permanently or temporarily enjoined by order, judgment or decree from
engaging in or continuing any conduct or practice in connection with the sale or purchase
of real estate or cemetery property, time-share intervals, membership camping contracts
or campgrounds, or securities or involving consumer fraud or the racketeering laws of this
state.
(c) Had an administrative order entered against him by a real estate regulatory agency or
security regulatory agency.

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(d) Had an adverse decision or judgment entered against him involving fraud or
dishonesty or involving the conduct of any business in or a transaction in real estate,
cemetery property, time-share intervals or membership camping campgrounds or
contracts.
(e) Disregarded or violated any of the provisions of this chapter or the rules of the
commissioner pertaining to this chapter.
(f) Participated in, operated or held an interest in any entity to which subdivision (b), (c),
(d) or (e) applies.
D. No owner or agent may sell or lease or offer for sale or lease unsubdivided lands without first obtaining
a public report and a certificate of administrative completeness from the commissioner. Any sale or lease
of unsubdivided lands prior to issuance of the public report shall be voidable by the purchaser. An action
by the purchaser to void the transaction shall be brought within three years of the date of execution of the
purchase agreement by the purchaser. In any voidance action the prevailing party is entitled to
reasonable attorney fees as determined by the court.
E. Any applicant objecting to the denial of a public report, within thirty days after receipt of the order of
denial, may file a written request for a hearing. The commissioner shall hold the hearing within twenty
days after receipt of the request for a hearing unless the party requesting the hearing requests a
postponement. If the hearing is not held within twenty days after a request for a hearing is received plus
the period of any postponement, or if a proposed decision is not rendered within forty-five days after
submission, the order of denial shall be rescinded and a public report issued.
F. On the commissioner's own motion, or when the commissioner has received a complaint and has
satisfactory evidence that the owner or agent is violating any provision set forth in this article or the rules
of the commissioner or has engaged in any unlawful practice as defined in section 44-1522 with respect
to the sale of unsubdivided lands or deviated from the provisions of the public report, the commissioner
may investigate the subdivision project and examine the books and records of the owner or agent. For the
purpose of examination, the owner or agent shall keep and maintain records of all sales transactions and
funds received by the owner or agent pursuant to the sales transactions and shall make them accessible
to the commissioner upon reasonable notice and demand.
G. On the commissioner's own motion, or when the commissioner has received a complaint and has
satisfactory evidence that grounds exist as provided in subsection C of this section or that any person has
engaged in any unlawful practice as defined in section 44-1522 with respect to the sale of unsubdivided
lands or deviated from the provisions of the public report, the commissioner may conduct an investigation
of the matter, issue a summary order as provided in section 32-2157, or hold a public hearing and, after
the hearing, may issue the order or orders the commissioner deems necessary to protect the public
interest and ensure compliance with the law, rules or public report. If, after the hearing, the violation of the
law, rules or public report continues, the commissioner may bring an action in any court of competent
jurisdiction against the person to enjoin the person from continuing the violation or engaging in or doing
any act or acts in furtherance of the violation.
32-2195.04. Sale of lots or parcels of unsubdivided lands; conditions precedent; methods
A. It is unlawful for the owner or agent of unsubdivided lands subject to the provisions of this article to sell
or offer to sell lots or parcels of such land unless the sale complies with one of the following:
1. Execution, delivery and recording of a deed in good and sufficient form conveying to the
purchaser merchantable and marketable title to the property subject only to such exceptions as
may be agreed to in writing by the purchaser. Any balance remaining unpaid by the purchaser
may be evidenced by a note and mortgage or deed of trust. The deed and mortgage or deed of
trust shall be recorded by the owner or agent within sixty days of execution thereof by the
purchaser.
2. Execution, delivery, recording and depositing in escrow, not later than sixty days after
execution by the purchaser, with a person or firm authorized to receive escrows under the laws of
this state or the state in which the unsubdivided lands are located, of a real estate sales contract
pertaining to the property, which contract sets forth the full and correct legal description of the
property being sold and the precise terms and conditions under which the property is being sold
together with:
(a) A copy of a preliminary title report showing the condition of title to the property on the
date of the real estate sales contract or a preliminary title report showing the condition of
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title on an earlier date together with a copy of any document, recorded subsequent to the
date of the preliminary title report, which affects the title to the property.
(b) An executed deed in good and sufficient form conveying to the purchaser
merchantable and marketable title, subject only to such exceptions as may be agreed to
in writing by the purchaser which deed, under the terms of the real estate sales contract,
is to be delivered to the escrow agent provided for under the contract within sixty days of
the purchaser's execution of the contract and is to be recorded within sixty days after
purchaser's compliance with the obligations imposed on him under the contract together
with any release or partial release of any blanket encumbrance pertaining to said real
property being sold.
(c) Any and all documents necessary to release or extinguish any blanket encumbrance
to the extent it applies to the real property being sold, or a partial release of the parcel
being sold from the terms and provisions of such blanket encumbrance.
3. Execution, delivery and recording of a deed to the real property to a trustee together with a
trust agreement and any and all documents necessary to release or extinguish any blanket
encumbrance to the extent it applies to property being sold, or a partial release of the lot or parcel
being sold from the terms and provisions of such blanket encumbrance. The trust agreement
shall provide for conveyance by the trustee to a purchaser, upon purchaser's compliance with the
obligations imposed on him under his real estate sales contract, by a deed in good and sufficient
form conveying to the purchaser merchantable and marketable title, subject only to such
exceptions as may be agreed to in writing by the purchaser. The real estate sales contract of the
real property being sold shall be recorded by the owner or agent of unsubdivided lands within
sixty days of execution of the real estate sales contract by the purchaser. The trustee shall
execute, record and deliver the deed and record the release or partial release required by this
subsection within sixty days of the purchaser's fulfillment of the terms of his real estate sales
contract.
B. All documents required to be recorded under the provisions of this section shall be recorded in the
county and state wherein the unsubdivided land is located.
C. Any sale or assignment of a mortgage, deed of trust or real estate sales contract by an owner or agent
of unsubdivided lands or trustee shall be recorded in the county and state where the unsubdivided land is
located and a notice of such sale or assignment provided to the commissioner, the recording and notice
thereof to be effected not later than sixty days after the execution of such assignment.
D. Any contract or agreement entered into after January 1, 1977, to purchase or lease a parcel in
unsubdivided lands subject to this article may be rescinded by the purchaser without cause of any kind by
sending or delivering written notice of rescission by midnight of the seventh calendar day following the
day on which the purchaser or prospective purchaser has executed such contract or agreement. The
owner or agent shall clearly and conspicuously disclose, in accordance with the regulations adopted by
the commissioner, the right to rescind provided for in this section and shall provide, in accordance with
regulations adopted by the commissioner, an adequate opportunity to exercise the right to rescission
within the time limit set in this section. The commissioner may adopt regulations to exempt commercial
and industrial developments from such requirement.
E. If a buyer of a lot or parcel of unsubdivided land has not inspected the lot or parcel prior to the
execution of the purchase agreement, the buyer shall have a six-month period after the execution of the
purchase agreement to inspect the lot or parcel and at the time of the inspection have the right to
unilaterally rescind the purchase agreement. At the time of inspection, the buyer must sign an affidavit
stating that he has inspected the real property and at the request of the commissioner such affidavit may
be required to be filed with the department.
F. Only a bank, savings and loan association or title insurance company doing business under the laws of
this state or the United States or the state in which the unsubdivided land is located, or a title insurance
company wholly-owned subsidiary or underwriting agent qualified under section 20-1580, or persons or
firms authorized to receive escrows under the laws of this state or the state in which the unsubdivided
land is located may act as trustee under paragraph 3 of subsection A of this section. Nothing in this
subsection extends to a firm or individual authority to act as a trustee unless such authority is otherwise
provided by law.

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32-2195.05. Advertising material; contents; order prohibiting use; costs of investigation
A. The owner or agent shall file with the commissioner a copy of any original promotional and advertising
material used in connection with sales of unsubdivided lands and copies of any material changes therein.
The owner or agent shall file with the commissioner, within twenty-one days of use, a copy of any
subsequent advertising of any kind, used directly or indirectly in connection with the purchase, sale or
lease of any lot or parcel subject to the provisions of this article. It shall not be necessary to make
repetitive filings of material which is the same as or varies only in minor details from material which has
previously been filed with the commissioner for the unsubdivided lands.
B. No advertising, communication or sales literature of any kind, including oral statements by
salespersons or other persons, shall contain:
1. Any untrue statement of material fact or any omission of material fact which would make such
statement misleading in light of the circumstances under which such statement was made.
2. Any statement or representation that the land is offered without risk or that loss is impossible.
3. Any statement or representation or pictorial representation of proposed improvements or
nonexistent scenes without clearly indicating the improvements are proposed and the scenes do
not exist.
4. Any statement or representation that the lot or parcels are suitable as homesites or building
lots unless either of the following is true:
(a) Potable water is available from a certificated public utility or a municipal corporation
and either an individual sewage disposal system will operate or a sewer system is
available from a certified public utility or a municipal corporation.
(b) Facts to the contrary are clearly and conspicuously included in each advertisement
pertaining to the property.
C. All advertising and sales literature shall be consistent with the information contained in the notice of
intention pursuant to section 32-2195 and the public report pursuant to section 32-2195.03.
D. If it appears to the commissioner that any person is or has engaged in advertising or promotional
practices in violation of this article, the commissioner may hold a hearing as a contested case under title
41, chapter 6, article 10 and issue such order or orders as he deems necessary to protect the public
interest, or the commission may bring an action in any court of competent jurisdiction against such person
to enjoin such person from continuing such violation.
E. The commissioner may adopt such rules and guidelines as he deems necessary to protect the public
interest and to assure that all advertising and promotional practices with respect to land subject to the
provisions of this article are not false or misleading.
F. It is unlawful for any owner, agent or employee of any development or other person with intent directly
or indirectly to sell or lease lots or parcels subject to the provisions of this article to authorize, use, direct
or aid in any advertising, communication, sales literature or promotional practice which violates this
section.
G. Nothing contained in this section shall apply to the owner or publisher of a newspaper, magazine or
other publication of printed matter wherein such advertisement appears or to the owner or operator of a
radio or television station which disseminates such advertisement when the owner, publisher or operator
has no knowledge of the intent, design or purpose of the advertiser.
32-2195.06. Civil liabilities
A. When any part of the notice of intention filed pursuant to section 32-2195 contains an untrue statement
of a material fact or omits a material fact required to be stated in such notice, the owner or agent shall be
liable as provided in this section to any person who acquires land covered by such notice of intention
during such period the notice of intention remained uncorrected unless it is proved that at the time of such
acquisition the person acquiring the land knew of such untruth or omission.
B. Any owner or agent who sells or leases unsubdivided lands subject to this article in violation of section
32-2195.03 or by means of a public report which contains an untrue statement of a material fact or omits
a material fact required to be stated in such report shall be liable to the purchaser of such land as
provided in this section.
C. It is unlawful for an owner or agent in selling or leasing, or offering to sell or lease, any unsubdivided
lands subject to this article to:
1. Employ any device, scheme, or artifice to defraud.

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2. Obtain money or property by means of a material misrepresentation with respect to any
information included in the notice of intention or the public report or with respect to any other
information pertinent to the parcel and upon which the purchaser relies.
3. Engage in any transaction, practice or course of business which operates or would operate as
a fraud or deceit upon a purchaser.
D. Damages in any suit brought pursuant to this section shall be the difference between the amount paid
for the land together with the reasonable cost of improvements to such land and whichever of the
following amount is the smallest:
1. The value of the land and improvements as of the time such suit was brought.
2. The price at which such land was disposed of in a bona fide market transaction prior to suit.
3. The price at which such land was disposed of in a bona fide market transaction after suit was
brought but prior to judgment.
E. In any action in which a violation of this section is established the purchaser shall also be entitled to
recover reasonable attorney fees as determined by the court. If a violation is not established, the court, in
its discretion, may award reasonable attorney fees to the defendant.
F. Every person who becomes liable to make any payment pursuant to this section may recover
contribution as in cases of contract from any person who, if sued separately, would have been liable to
make the same payment.
G. In no case shall the amount recoverable pursuant to this section exceed the sum of the purchase price
of the land, the reasonable cost of improvements installed by the purchaser and reasonable court costs
and attorneys fees.
H. Nothing contained in this section shall be construed to preclude any other remedies that may exist at
law or in equity.
I. No action shall be maintained to enforce any liability created pursuant to subsection A or B of this
section unless brought within one year after the discovery of the untrue statement or the omission or after
such discovery should have been made by the exercise of reasonable diligence. No action shall be
maintained to enforce any liability created pursuant to subsection C of this section unless brought within
two years after the violation upon which it is based. In no event shall any such action be brought by a
purchaser more than three years after the sale or lease to such purchaser.
32-2195.07. Jurisdiction
The commissioner shall not be denied jurisdiction over any person subject to the provisions of this article
because of similar jurisdiction over such person by any other agency or the applicability to such person of
any regulation prescribed pursuant to any other provision of law.
32-2195.09. Recordable forms of contracts
In accordance with regulations adopted by the commissioner, each purchaser of unsubdivided land shall
be provided with a copy, in recordable form, of each contract involved in the sale of such land to the
purchaser at the closing of the contract.
32-2195.10. Change of plan after approval by commissioner; notice
It is unlawful for an owner, agent or subdivider, after submitting to the commissioner a plan under which
unsubdivided lands are to be offered for sale or lease and securing his approval, to change the plan
materially without first notifying the commissioner in writing of the intended change. On receipt of a notice
of a change of plan, the commissioner, if he determines such action to be necessary for the protection of
purchasers, may suspend his approval of the sale or lease pending amendment of the public report.
32-2195.11. Civil penalties; limitation
A. An owner or agent who is subject to the jurisdiction of the department and who violates any provision
of this chapter relating to the sale or lease of unsubdivided lands or any rule adopted or order issued by
the commissioner relating to the sale or lease of unsubdivided lands or who engages in any unlawful
practices defined in section 44-1522 with respect to the sale or lease of unsubdivided lands may be
assessed a civil penalty by the commissioner, after a hearing, in an amount of not more than one
thousand dollars per infraction. An infraction that concerns more than one lot among unsubdivided lands
is a single infraction for the purposes of this section.

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B. A proceeding for the imposition of a civil penalty or for suspension or revocation of a license for a
violation of this article or any rule adopted or order issued by the commissioner must be commenced
within the earlier of five years of either of the following:
1. Actual discovery by the department.
2. Discovery that should have occurred if the department was reasonably diligent.
32-2195.12. Recording of actions
A. Whenever the commissioner issues a cease and desist order, obtains a court order enjoining further
sales, issues an order of prohibition or suspends approval of an unsubdivided lands public report, the
action shall be recorded in the book of deeds in the office of the county recorder in any county in which
the unsubdivided property is located and include the legal description of the affected land. The
commissioner shall also provide notice of the order or suspension to all affected parties with an
ownership interest of record in any lot, parcel or fractional interest, in the unsubdivided property within ten
business days of issuing the order or suspension.
B. In the event of a revocation of any of the orders which require recording in subsection A, an order of
release shall be recorded in the same manner within ten business days.

Article 9 Real Estate Timeshares
32-2197. Definitions
In this article, unless the context otherwise requires:
1. "Accommodation" means any apartment, condominium or cooperative unit, cabin, lodge, hotel
or motel room, or other private or commercial structure containing toilet facilities that is designed
and available for use and occupancy as a residence by one or more individuals and that is
included in the offering of a timeshare plan.
2. "Advertisement" means any written, oral or electronic communication that is directed to or
targeted to persons in this state and that contains a promotion, inducement, premium or offer to
sell a timeshare plan, including brochures, pamphlets, radio and television scripts, electronic
media, telephone and direct mail solicitations and other means of promotions.
3. "Assessment" means the share of funds required for the payment of common expenses that
the managing entity assesses periodically against each purchaser.
4. "Association" means any organized body consisting of the purchasers of interests in a
timeshare plan.
5. "Component site" means a specific geographic location where accommodations that are part of
a multisite timeshare plan are located. Separate phases of a single timeshare property in a
specific geographic location and under common management are a single component site.
6. "Developer" means either of the following:
(a) Any person, corporation, partnership, limited liability company, trust or other entity,
other than a sales agent, that creates a timeshare plan or is in the business of selling
timeshare interests or employs sales agents to sell timeshare interests.
(b) Any person or entity that succeeds to the interest of the developer by sale, lease,
assignment, mortgage or other transfer if the person offers at least twelve timeshare
interests in a particular timeshare plan and the person is in the business of selling
timeshare interests or employs sales agents to sell timeshare interests.
7. "Dispose" or "disposition" means a voluntary transfer or assignment of any legal or equitable
interest in a timeshare plan other than the creation, transfer, assignment or release of a security
interest.
8. "Exchange company" means any person owning or operating or both owning and operating an
exchange program.
9. "Exchange program" means any method, arrangement or procedure for the voluntary
exchange of timeshare interests or other property interests. Exchange program does not include
an assignment of the right to use and occupy accommodations and facilities to purchasers or
owners of timeshare interests within a single site timeshare plan.
10. "Managing entity" means the association or other person that undertakes the duties,
responsibilities and obligations of the management of a timeshare plan.

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11. "Multisite timeshare plan" includes a specific timeshare interest or a nonspecific timeshare
interest.
12. "Nonspecific timeshare interest" means the right to use accommodations at more than one
component site created by or acquired through the timeshare plan's reservation system, but not
including a specific right to use any particular accommodations.
13. "Offer" or "offering" means any marketing, promotion, solicitation or advertising of any kind
that is intended to interest prospective customers in the sale, lease or use of a timeshare interest
in a timeshare plan, other than as security for an obligation, whether now or in the future. Offer or
offering does not include a general promotion of a resort not intended to market timeshare
interests.
14. "Person" means a natural person, corporation, limited liability company, partnership, joint
venture, association, estate, trust, federal or state government, political subdivision or other legal
entity or any combination of these entities.
15. "Premium" means anything of value offered, promised or given to a prospective customer as
an incentive to attend a presentation for the sale, lease or use of a timeshare interest or to tour or
visit a timeshare property.
16. "Promotion" means a plan or device, including one involving the possibility of a prospective
purchaser receiving a vacation, discount vacation, gift or prize, used by a developer or the
developer's employee, or on the developer's behalf by an agent or the agent's employee, an
independent contractor or the independent contractor's employee in connection with the offering
and sale of timeshare interests in a timeshare plan.
17. "Purchaser" means any person, other than a developer, who, by means of a voluntary
transfer, acquires a legal or equitable interest in a timeshare plan other than a security for an
obligation.
18. "Purchase agreement" means a document that legally obligates a person to sell or buy a
timeshare interest.
19. "Redemption certificate" means a premium that grants a right to or the promise of the future
delivery of goods or services and that is conditioned on the holder's compliance with stated
requirements, limitations or conditions. Redemption certificate does not include a prepaid
premium or discount certificate, other than a travel related premium, that is redeemable for goods
or services at a business located in this state, including a restaurant or retail store.
20. "Reservation system" means the method, arrangement or procedure in which a purchaser, in
order to reserve the use or occupancy of any accommodation of a multisite timeshare plan for
one or more timeshare periods, is required to compete with other purchasers in the same
multisite timeshare plan, regardless of whether the reservation system is operated and
maintained by the multisite timeshare plan managing entity, an exchange company or any other
person. If a purchaser is required to use an exchange program as the purchaser's principal
means of obtaining the right to use and occupy accommodations, that arrangement is a
reservation system. Reservation system does not include the use by an exchange company of a
mechanism for the exchange of use of timeshare periods among members of an exchange
program.
21. "Sales agent" means a person who, directly or through the person's employees, agents or
independent contractors, sells or offers to sell one or more timeshare interests in a timeshare
plan to any individual in this state.
22. "Single site timeshare plan" means the right to use accommodations at a single timeshare
property.
23. "Specific timeshare interest" means the right to use accommodations at a specific timeshare
property, together with use rights in accommodations at one or more other component sites
created by or acquired through the timeshare plan's reservation system.
24. "Timeshare estate" means the right of occupancy in a timeshare property that is coupled with
an estate in real property.
25. "Timeshare instrument" means one or more documents creating or governing the operation of
a timeshare plan.
26. "Timeshare interest" includes either a timeshare estate or a timeshare use.
27. "Timeshare period" means the period of time when the purchaser of a timeshare plan is
afforded the opportunity to use the accommodations of a timeshare plan.
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28. "Timeshare plan" means any arrangement, plan or similar device, other than an exchange
program, whether by membership agreement, sale, lease, deed, license or right-to-use
agreement or by any other means, in which a purchaser, in exchange for consideration, receives
ownership rights in or the right to use accommodations for a period of time less than a full year
during any given year, but not necessarily for consecutive years. A timeshare plan may be a
single site timeshare plan or a multisite timeshare plan.
29. "Timeshare property" means one or more accommodations subject to the same timeshare
instrument, together with any other property or rights to property appurtenant to those
accommodations.
30. "Timeshare use" is the right to occupy a timeshare property that is not coupled with an estate
in real property.
32-2197.01. Creation of timeshare plans; ratio
A timeshare plan may be created in any accommodation unless prohibited by any law or county, city or
town zoning ordinance or regulation to the contrary. All timeshare plans shall maintain a one-to-one
purchaser-to accommodation ratio so that the total number of purchasers eligible to use the
accommodations of the timeshare plan during a given calendar year never exceeds the total number of
accommodations available for use in the timeshare plan during the same calendar year. For purposes of
calculating the ratio, a purchaser who is delinquent in the payment of timeshare plan assessments shall
continue to be considered eligible to use the accommodations of the timeshare plan.
32-2197.02. Notice of intent to sell; application for timeshare plan public report; authorization for
pre-sales
A. Any person who sells, offers to sell or attempts to solicit prospective purchasers located in this state to
purchase a timeshare interest or any person who creates a timeshare plan with an accommodation in this
state, whether or not the plan is sold or offered for sale in this state, shall register a notice of intent to sell
and application for a public report with the department.
B. Except as otherwise provided in subsection C of this section, an application for a public report for a
timeshare plan must contain the following documents and information:
1. The name and address of the owner and developer. If the holder of any ownership interest in
the land is other than an individual, including a corporation, partnership, limited liability company,
trust or other entity, a statement naming the type of legal entity and listing the interest and the
extent of such interest of each principal in the entity. For the purposes of this paragraph,
"principal" means any person or entity having a ten per cent or more financial interest or, if the
legal entity is a trust, each beneficiary of the trust holding a ten per cent or more beneficial
interest.
2. A comprehensive statement of the timeshare plan.
3. The legal description and location of the timeshare property being offered.
4. To the extent required by applicable local or state laws, a recorded map of the timeshare
property showing book, page and date of recording or instrument number and date of recording,
and if required by applicable local or state laws, approval by the county or city in which the
timeshare property is located. A map, survey or location plan is required for incomplete timeshare
properties. A timeshare property involving completed buildings where all purchasers are given an
on-site tour prior to a financial commitment may not require a plat map. The need for a map,
survey, location plan or building plan on such completed timeshare properties will be determined
at the time of application.
5. A description of the total timeshare property in terms of the number of buildings, number of
stories, number of units, common areas of the timeshare property or public use areas in any
hotel, motel or other facility.
6. Proof of adequate financial arrangements and assurances for completion of any improvements
included in the offering to be installed by the developer, the estimated schedule for completion of
the improvements and provisions, if any, for the continued maintenance of the improvements.
7. A true statement of the availability of sewage disposal facilities and other public utilities
including water, electricity, gas and telephone facilities in the timeshare property and the
estimated schedule for their installation.

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8. A statement of the provisions that have been made for permanent access, and provisions, if
any, for health department approved sewage and solid waste collection and public utilities,
including water.
9. A complete disclosure as to the operating costs of the timeshare plan, including all of the
variable costs of operation, management and reserves and method of assessment, including
evidence of financial arrangements which provide for the developer's guarantee of payment of
assessment on unsold interests, or if the developer is not paying such costs, the effect such
nonpayment will have on operating costs.
10. A statement that the developer must notify the commissioner if a timeshare plan
accommodation may become subject to a tax or other lien arising out of claims against other
purchasers in the same timeshare plan. The commissioner may require the developer to notify a
prospective purchaser of any potential tax or lien that would materially and adversely affect the
prospective purchaser.
11. A current preliminary title report for all accommodations comprising the timeshare property for
which the application is being made.
12. The recorded declaration of dedication of the timeshare property or other timeshare
instruments or contracts incorporating all covenants of the grantor or lessor and creating the
timeshare interests and the provisions of the plan, if any, to include organization of an
association.
13. A true statement as to the methods to be used in accordance with section 32-2197.12 to
provide that the purchaser of a timeshare interest will not lose or have the purchaser's interest
imperiled by the foreclosure of underlying liens, encumbrances or other obligations and that the
developer can convey, or cause to be conveyed, the interest in the offering.
14. The terms and conditions as to how a purchaser's interest is to be conveyed including
examples of all contracts, purchase agreements, deeds, fact sheets and other instruments to be
used in marketing, financing and conveying timeshare interests.
15. A true statement as to title to personal property within the units or timeshare property incident
to a purchaser's use and how purchasers will receive assured use of personal property during the
term offered.
16. A statement of the provisions made for the management of the timeshare plan, including a
copy of the management agreement, relationship with the developer and whether the
management entity will be bonded or insured.
17. The name, street address, mailing address and telephone number of:
(a) The designated broker, if any, used by the developer.
(b) A managing entity of the timeshare plan.
18. Copies of all contracts and promotional material pertaining to any exchange program
included in the offering.
19. If the timeshare property or timeshare plan being registered is located within the United
States, but outside this state, each filing must include evidence that the timeshare property or
timeshare plan is qualified for sale in the home state where the timeshare property or timeshare
plan is located according to the standards or requirements for the sale of timeshare interests
existing in the home state at the time of the filing.
20. If the timeshare property or timeshare plan being registered is located outside the United
States, each filing of a foreign timeshare property or timeshare plan must include evidence
establishing that all requirements of the country where the timeshare property or timeshare plan
is located have been met for the sale of timeshare interests or the local equivalent of timeshare
interests in the home country at the time of the filing.
21. A public report that complies with the requirements of section 32-2197.08.
22. Such other information and such other documents and certificates as the commissioner may
reasonably require.
C. At the developer's request the commissioner may authorize the developer to conduct pre-sales of the
timeshare plan before the issuance of a public report if the application for a public report is
administratively complete, as determined by the commissioner or as established by rule. The
authorization for pre-sales allows the developer to begin offering and selling timeshare interests while the
application for the timeshare public report is in process. To obtain an authorization to conduct pre-sales,
the developer shall do all of the following:
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1. Submit a formal written request to the commissioner for an authorization to conduct pre-sales.
2. Submit an administratively complete application for a timeshare public report to the
commissioner, including all appropriate fees and exhibits required under subsection B of this
section.
3. Provide evidence acceptable to the commissioner that all monies received by the developer
will be placed in an independent escrow account with instructions that monies will not be released
until a timeshare public report has been granted.
4. Give each purchaser and prospective purchaser a copy of the proposed timeshare public
report that the developer has submitted to the department with the initial application.
5. Give each purchaser the opportunity to cancel the purchase agreement in accordance with
section 32-2197.03. The purchaser shall have an additional opportunity to cancel in accordance
with section 32-2197.03 on the issuance of an approved timeshare public report only if the
commissioner determines that there is a material and adverse change in the disclosures
contained in the approved timeshare public report from those given to the purchaser in the
proposed timeshare public report.
32-2197.03. Rescission of contract or agreement
A. The purchaser may rescind the purchase agreement without cause of any kind by sending or
delivering written notice of rescission by midnight of the seventh calendar day following the day on which
the purchaser or prospective purchaser executed the purchase agreement. The rescission rights shall be
conspicuously disclosed in the purchase agreement. If the developer allows the rescission period to
extend beyond the seven calendar days, the rescission period disclosure in the purchase agreement shall
reflect the longer period of time. The disclosure required by this subsection shall be printed immediately
before the space reserved in the purchase agreement for the signature of the purchaser and shall include
the following information:
1. The purchaser may cancel the purchase agreement without a penalty or obligation within
seven calendar days after the purchaser signs the purchase agreement.
2. If the purchaser decides to cancel the purchase agreement, the purchaser shall notify the seller
in writing of the purchaser's intent to cancel.
3. The purchaser's notice of cancellation is effective on the date the cancellation is sent and shall
be sent to the seller at the seller's address. The seller's address and telephone number shall be
listed on the purchase agreement.
4. The purchaser may execute all closing documents in advance. However, the closing, as
evidenced by delivery of the deed or other document, is prohibited before the seven calendar day
cancellation period expires.
B. This section applies to any timeshare plan approved by the commissioner pursuant to either article 4 of
this chapter or this article, regardless of the date of issuance of the public report.
32-2197.04. Notification of material change
A. The developer of a timeshare plan that is the subject of an outstanding timeshare public report shall
immediately report to the department relevant details concerning any material change in the timeshare
plan itself or in the program for marketing the timeshare interests.
B. On receipt of a written notice of a material change, the commissioner, if the commissioner determines
such action to be necessary for the protection of purchasers, may suspend his approval of the sale or
lease pending amendment of the public report. For sales made after the material change and pending
amendment of the public report, the commissioner may require the developer to fully disclose the change
in a prepared supplement to the public report. The supplement shall be delivered with the previously
approved public report to all prospective purchasers until the new public report is issued. The
commissioner shall not require the developer to deliver the amended public report to or obtain a receipt
from prior purchasers unless the commissioner specifically finds that the developer's disclosure of the
changes was not an adequate disclosure.
32-2197.05. Escrow or trust account; agreement; evidence of completion; financial assurance
A. A developer of a timeshare plan shall deposit in an escrow or trust account in a federally insured
depository one hundred per cent of all monies that are received during the purchaser’s rescission period.

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The deposit of these monies shall be evidenced by an executed agreement between the escrow or trust
account agent and the developer that includes the following provisions:
1. Monies may be disbursed to the developer by the escrow or trust account agent from the
account only after expiration of the purchaser’s rescission period and in accordance with the
purchase agreement, subject to subsection B.
2. If a purchaser cancels the purchase agreement pursuant to the agreement's terms, the monies
shall be paid to the purchaser or paid to the developer if the purchaser’s monies have been
previously refunded by the developer.
B. If a developer contracts to sell a timeshare interest and the construction of any timeshare property in
which the timeshare interest is located has not been completed, when the rescission period expires the
developer shall continue to maintain in an escrow or trust account all monies received by the developer or
on the developer's behalf from the purchaser under a purchase agreement either before or after the
rescission period expires. The types of documentation that shall be required for evidence of completion
include a certificate of occupancy, a certificate of substantial completion or an equivalent public safety
inspection from an agency in the applicable jurisdiction or other evidence of completion acceptable to the
commissioner or as provided by rule. Monies shall be released from escrow as follows:
1. If a purchaser properly cancels the purchase agreement pursuant to the agreement's terms,
the monies shall be paid to the purchaser or paid to the developer if the developer has previously
refunded the purchaser’s monies.
2. If a purchaser defaults in the performance of the purchaser’s obligations under the purchase
agreement, the monies shall be paid to the developer.
3. If the developer defaults in the performance of the developer's obligations under the purchase
agreement, the monies shall be paid to the purchaser.
4. If the monies of a purchaser have not been previously disbursed in accordance with paragraph
2 of this subsection, the monies may be disbursed to the developer by the escrow agent on the
issuance of acceptable evidence of completion of construction.
C. In lieu of placing monies in escrow in accordance with this section, the commissioner may accept from
the developer a surety bond, irrevocable letter of credit or other financial assurance acceptable to the
commissioner or as provided by rule. Any acceptable financial assurance must be in an amount equal to
or in excess of the monies that would otherwise be placed in escrow or in an amount equal to or in
excess of the cost to complete the incomplete property in which the timeshare interest is located.
D. The developer shall make documents related to the escrow or trust account or escrow or trust
obligation available to the commissioner on the commissioner’s request. The developer shall maintain
any disputed monies in the escrow account until either of the following occurs:
1. The developer receives a written direction agreed to and signed by all parties.
2. A civil action regarding the monies has been filed, in which case the developer shall deposit
the monies with the court of appropriate jurisdiction.
32-2197.06. Declaration of dedication
The declaration or other documents described in section 32-2197.02, subsection B, paragraph 12 shall
include the following general provisions as applicable to the particular timeshare property:
1. Provisions for organization of an association if applicable.
2. A description of the real and personal property for the common ownership or use of the
timeshare interest owners.
3. A description of the services to be made available to timeshare interest owners under the
timeshare program.
4. Provisions for transfer to the association of control over the timeshare property and services
comprising the project.
5. Procedures for calculating and collecting regular and special assessments from timeshare
owners to defray expenses of the timeshare plan and for related purposes.
6. Procedures for preparation and dissemination to timeshare owners of budgets, financial
statements and other information related to the timeshare plan.
7. Procedures for terminating the membership and selling the interest of a timeshare owner for
failure to pay regular or special assessments.

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8. Policies and procedures for the disciplining of members for failure to comply with provisions of
the governing timeshare instruments for the timeshare plan, including the late payment of
assessments.
9. Procedures for employing and for terminating the employment of a managing entity for the
timeshare plan.
10. Provisions for adoption of standards and rules of conduct for the use of accommodations by
timeshare interest owners.
11. Provisions for establishment of the rights of owners to the use of accommodations according
to a schedule or under a first reserved, first served priority system.
12. If applicable, procedures for compensating use periods or monetary compensation for an
owner of a timeshare interest in a timeshare plan if an accommodation cannot be made available
for the period of use to which the owner is entitled by schedule or under a reservation system
because of an error by the association or managing entity.
13. Provisions for comprehensive general liability insurance for death, bodily injury and property
damage resulting from the use of an accommodation within the timeshare plan by timeshare
owners, their guests and other users.
14. A description of restrictions upon partition of a timeshare property.
15. Policies and procedures for the use of accommodations for transient accommodations or
other income producing purposes during a period of nonuse by timeshare owners.
16. Policies and procedures for the inspection of the books and records of the timeshare plan by
timeshare owners.
17. Procedures for the amendment of the timeshare instruments for the timeshare plan.
18. If applicable, procedures for annexation of additional accommodations to the timeshare plan.
19. Policies and procedures in the event of condemnation, destruction or extensive damage to
accommodations including provisions for the disposition of insurance proceeds or damages
payable on account of damage or condemnation.
20. Policies and procedures on regular termination of the timeshare plan including details on what
happens to a purchaser's interest on termination.
21. Policies and procedures for collective decision making and the undertaking of action by or in
the name of the association, if any, including, if applicable, representation of timeshare interests
in an association for the common interest subdivision in which the interests are located.
22. If applicable, allocation of the costs of maintenance and operation between those
accommodations dedicated to a timeshare plan and accommodations in the same timeshare plan
being used for transient accommodations.
23. Policies and procedures for entry into accommodations of the timeshare plan under authority
granted by the association for the purpose of cleaning, maid service, maintenance and repair,
including emergency repairs and for the purpose of abating a nuisance or a known or suspected
dangerous or unlawful activity.
32-2197.07. Examination of plan by commissioner; fees
A. The commissioner shall examine any timeshare plan offered for sale or lease in this state or located in
this state and shall make public his findings.
B. The commissioner may physically inspect any timeshare plan offered for sale or lease in this state or
located in this state.
C. An initial filing fee of twenty dollars per interest with a maximum fee of not more than one thousand
dollars shall accompany the notice of intention filed pursuant to section 32-2197.02. A filing fee as
established by rule shall accompany the application to amend the timeshare public report required in
section 32-2197.04.
D. The developer of the timeshare plan shall bear the total cost of travel and subsistence expenses
incurred by the department in the examination, in addition to the initial filing fee provided for in this
section, on the basis of actual cost to the department.
32-2197.08. Issuance of public report and amended public report by commissioner on timeshare
plan; denial of issuance; additional information; use of another state's public report
A. On examination of a timeshare plan, the commissioner, unless there are grounds for denial, shall
approve for use by the developer a public report authorizing the sale or lease of the timeshare interests
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within the timeshare plan. For all timeshare interests sold in this state, the commissioner shall require the
developer to reproduce the public report and furnish each prospective customer with a copy, taking a
receipt for each copy. The public report shall be made available to each prospective purchaser in written
format and may also be made available in CD-ROM or other electronic format as approved by the
commissioner. The public report shall include the following:
1. The name and principal address of the owner and developer.
2. A description of the type of timeshare interests being offered.
3. A description of the existing and proposed accommodations and amenities of the timeshare
plan, including type and number, any use restrictions and any required fees for use.
4. A description of any accommodations and amenities that are committed to be built, including:
(a) The developer's schedule of commencement and completion of all accommodations
and amenities.
(b) The estimated number of accommodations per site that may become subject to the
timeshare plan.
5. A brief description of the duration, phases and operation of the timeshare plan.
6. The current annual budget if available or the projected annual budget for the timeshare plan.
The budget shall include:
(a) A statement of the amount or a statement that there is no amount included in the
budget as a reserve for repairs and replacement.
(b) The projected common expense liability, if any, by category of expenditures for the
timeshare plan.
(c) A statement of any services or expenses that are not reflected in the budget and that
the developer provides or pays.
7. A description of any liens, defects or encumbrances on or affecting the title to the timeshare
interests.
8. A statement that by midnight of the seventh calendar day after execution of the purchase
agreement a purchaser may cancel any purchase agreement for a timeshare interest from a
developer together with a statement providing the name and street address where the purchaser
should mail any notice of cancellation. However, if, by agreement of the parties through the
purchase agreement, the purchase agreement allows for cancellation of the purchase agreement
for a period of time exceeding seven calendar days, the public report shall include a statement
that the cancellation of the purchase agreement is allowed for that period of time exceeding
seven calendar days.
9. A description of any bankruptcies, pending suits, adjudications or disciplinary actions material
to the timeshare interests of which the developer has knowledge.
10. Any restrictions on alienation of any number or portion of any timeshare interests.
11. Any current or expected fees or charges to be paid by timeshare purchasers for the use of
any amenities related to the timeshare plan.
12. The extent to which financial arrangements have been provided for completion of all promised
improvements.
13. If the timeshare plan provides purchasers with the opportunity to participate in any exchange
programs, a description of the name and address of the exchange companies and the method by
which a purchaser accesses the exchange programs.
14. Any other information that the developer, with the approval of the commissioner, desires to
include in the public report.
15. If the developer is offering a multisite timeshare plan, the following information, which may be
disclosed in a written, graphic or tabular form:
(a) A description of each component site, including the name and address of each
component site.
(b) The number of accommodations and timeshare periods, expressed in periods of use
availability, committed to the multisite timeshare plan and available for use by
purchasers.
(c) Each type of accommodation in terms of the number of bedrooms, bathrooms and
sleeping capacity and a statement of whether or not the accommodation contains a full
kitchen. For the purposes of this subdivision, "full kitchen" means a kitchen having a
minimum of a dishwasher, range, oven, sink and refrigerator.
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(d) A description of amenities available for use by the purchaser at each component site.
(e) A description of the reservation system, including the following:
(i) The entity responsible for operating the reservation system.
(ii) A summary of the rules governing access to and use of the reservation
system.
(iii) The existence of and an explanation regarding any priority reservation
features that affect a purchaser's ability to make reservations for the use of a
given accommodation on a first reserved, first served basis.
(f) A description of any right to make any additions, substitutions or deletions of
accommodations or amenities and a description of the basis on which accommodations
and amenities may be added to, substituted in or deleted from the multisite timeshare
plan.
(g) A description of the purchaser's liability for any fees associated with the multisite
timeshare plan.
(h) The location and the anticipated relative use demand of each component site in a
multisite timeshare plan as well as any periodic adjustment or amendment to the
reservation system that may be needed in order to respond to actual purchaser use
patterns and changes in purchaser use demand for the accommodations existing at the
time within the multisite timeshare plan.
(i) Any other information reasonably required by the commissioner or established by rule
necessary for the protection of purchasers of timeshare interests in timeshare plans.
(j) Any other information that the developer, with the approval of the commissioner,
desires to include in the public report.
16. If a developer offers a nonspecific timeshare interest in a multisite timeshare plan, the
information set forth in paragraphs 1 through 14 of this subsection as to each component site.
17. Any other information that the commissioner determines or establishes by rule is necessary to
implement the purpose of this article.
B. Except as otherwise provided in this subsection, the requirements prescribed by subsection A of this
section apply to a developer's application for approval to use an amended public report for the sale of
timeshare interests in a timeshare plan, including an amended public report to disclose and address a
material change under section 32-2197.04. A developer may elect to prepare an amended public report
for use in the sale of timeshare interests as follows:
1. The developer shall prepare the amended public report and provide a copy of the report to the
commissioner with the submission of the application for an amended public report, including any
notification required by section 32-2197.04, and shall comply with all other requirements of this
article.
2. An amendment filing fee established pursuant to section 32-2197.07 shall accompany the
application prescribed by paragraph 1 of this subsection.
3. On receipt of the application and amended public report, the department shall review and,
within fifteen business days if the amendment adds less than six new component sites to the
timeshare plan or within thirty calendar days if the amendment adds six or more new component
sites to the timeshare plan, issue either a certification that the application and amended public
report are administratively complete or a denial letter if it appears that the application, amended
public report or timeshare plan is not in compliance with all legal requirements, that the applicant
has a background of violations of state or federal law or that the applicant or timeshare plan
presents an unnecessary risk of harm to the public. If the commissioner has received the
application and amended public report but has not issued a certification or a denial letter within
the required time period, the application and amended public report are deemed administratively
complete.
4. The developer may commence sales or leasing activities as permitted under this article using
an amended public report when the commissioner issues a certification of administrative
completeness or as of the date the application and amended public report are deemed
administratively complete pursuant to paragraph 3 of this subsection. The certification may be
issued on paper or electronically.
5. Before or after the commissioner issues a certification of administrative completeness or, if
applicable, after the application and amended public report are deemed to be administratively
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complete pursuant to paragraph 3 of this subsection, the department may examine any public
report, timeshare plan or applicant that has applied for or received the certification. If the
commissioner determines that the public report, timeshare plan or applicant is not in compliance
with any requirement of state law or that grounds exist under this chapter to suspend, deny or
revoke a public report, the commissioner may commence an administrative action under section
32-2154, 32-2157 or 32-2197.14. If the developer immediately corrects the deficiency and fully
complies with state law, the commissioner shall promptly vacate any action that the commissioner
may have commenced pursuant to section 32-2154, 32-2157 or 32-2197.14.
6. The department shall provide forms and guidelines for the submission of the application and
amended public report pursuant to this subsection.
C. In the event of denial, suspension or revocation, grounds shall be set forth in writing at the time of
denial, suspension or revocation. The commissioner may deny, suspend or revoke the public report on
any of the following grounds:
1. Failure to comply with this article or the rules of the commissioner pertaining to this article.
2. The sale or lease would constitute misrepresentation to or deceit or fraud of the purchasers or
lessees.
3. Inability to demonstrate that adequate financial or other arrangements acceptable to the
commissioner have been made for completion of the timeshare property, installation of all streets,
sewers, electric, gas and water utilities, drainage, flood control and other similar improvements
included in the offering.
4. The developer, including if an entity, an officer, director, member, manager, partner, owner,
trust beneficiary holding ten per cent or more beneficial interest, stockholder owning ten per cent
or more of the stock or other person exercising control of the entity, has:
(a) Been convicted of a felony or misdemeanor involving theft, fraud or dishonesty or
involving the conduct of any business or a transaction in real estate, cemetery property,
timeshare interests or membership camping campgrounds or contracts.
(b) Been permanently or temporarily enjoined by order, judgment or decree from
engaging in or continuing any conduct or practice in connection with the sale or purchase
of real estate, cemetery property, timeshare interests, membership camping
campgrounds or contracts, or securities or involving consumer fraud or the Arizona
racketeering laws.
(c) Had an administrative order entered against him by a real estate regulatory agency or
securities regulatory agency.
(d) Had an adverse decision or judgment entered against him involving fraud or
dishonesty or involving the conduct of any business in or a transaction in real estate,
cemetery property, timeshare interests or membership camping campgrounds or
contracts.
(e) Disregarded or violated this chapter or the rules of the commissioner pertaining to this
chapter.
(f) Participated in, operated or held an interest in any entity to which subdivision (b), (c),
(d), or (e) of this paragraph applies.
5. If within this state, the timeshare property is incompatible with the existing neighborhood and
would introduce into a neighborhood a character of property or use that would clearly be
detrimental to property values in that neighborhood.
D. If the timeshare property is within an active management area, as defined in section 45-402, the
commissioner shall deny issuance of a public report unless the developer has been issued a certificate of
assured water supply by the director of water resources and has paid all applicable fees pursuant to
sections 48-3772 and 48-3774.01, or unless the developer has obtained a written commitment of water
service for the timeshare property from a city, town or private water company designated as having an
assured water supply by the director of water resources pursuant to section 45-576.
E. In areas outside of active management areas, if the timeshare property is located in a county that has
adopted the provision authorized by section 11-823, subsection A or in a city or town that has enacted an
ordinance pursuant to section 9-463.01, subsection O, the commissioner shall deny issuance of a public
report unless one of the following applies:
1. The director of water resources has reported pursuant to section 45-108 that the timeshare
property has an adequate water supply.
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2. The developer has obtained a written commitment of water service for the timeshare property
from a city, town or private water company designated as having an adequate water supply by
the director of water resources pursuant to section 45-108.
3. The timeshare property was approved pursuant to an exemption authorized by section 9463.01, subsection K, pursuant to an exemption authorized by section 11-823, subsection B,
paragraph 1, pursuant to an exemption granted by the director of water resources under section
45-108.02 and the exemption has not expired or pursuant to an exemption granted by the director
of water resources under section 45-108.03.
4. The subdivision received final plat approval from the city, town or county before the
requirement for an adequate water supply became effective in the city, town or county, and there
have been no material changes to the plat since the final plat approval. If changes were made to
the plat after the final plat approval, the director of water resources shall determine whether the
changes are material pursuant to the rules adopted by the director to implement section 45-108.
F. In addition to providing to each prospective customer a copy of the public report as required in
subsection A of this section, the developer shall also provide to each customer before the close of any
transaction information and materials that identify any timeshare exchange companies currently under
contract and disclosure statements regarding the use of the timeshare exchange companies, as well as
any additional information the commissioner deems appropriate.
G. The commissioner may authorize for use in this state by a developer of a timeshare plan in which all
accommodations are located outside of this state a current public report that is issued by another
jurisdiction or an equivalent registration and disclosure document that is required before offering a
timeshare plan for sale, lease or use and that is issued by another jurisdiction. This authorization does
not constitute an exemption from other applicable requirements of this article.
32-2197.09. Rescindable sale or lease
A person shall not sell or lease or offer for sale or lease in this state timeshare interests in a timeshare
plan without first obtaining a public report or authorization to conduct pre-sales from the commissioner.
Unless exempt, any sale or lease of timeshare interests in a timeshare plan that consists of twelve or
more timeshare interests before issuance of the public report or authorization to conduct pre-sales or
failure to deliver the public report or evidence of pre-sale authorization renders the sale or lease
rescindable by the purchaser or lessee. An action by the purchaser or lessee to rescind the transaction
must be brought within three years of the date of the execution of the purchase or lease agreement by the
purchaser. In any rescission action, the prevailing party is entitled to reasonable attorney fees as
determined by the court.
32-2197.10. Timeshare interest reservations
A. The notice of intent required by section 32-2197.02 and the approval for use of a public report required
by section 32-2197.08 are not required for any party to enter into a timeshare interest reservation.
B. Before the approval for use of a public report for a timeshare plan, a deposit may be accepted from a
prospective buyer for a timeshare interest reservation if all of the following requirements are met:
1. Before accepting any timeshare interest reservation the prospective seller shall mail or deliver,
or provide in written, CD-ROM or other electronic format as approved by the commissioner,
notice of the seller’s intention to accept timeshare interest reservations to the department. The
notice shall include:
(a) The name, address and telephone number of the prospective seller.
(b) The name, address and telephone number of any real estate broker retained by the
prospective seller to promote the timeshare interest reservation program.
(c) The name and location of the timeshare property for which timeshare interest
reservations are to be offered.
(d) The form to be used for accepting timeshare interest reservations subject to approval
by the commissioner.
(e) The name and address of the independent third party escrow or trust account agent
responsible for holding the reservation deposits.
2. The reservation deposit for a single timeshare interest shall not exceed twenty per cent of the
purchase price.

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3. Within one business day after a reservation is accepted by the prospective seller, the
reservation deposit shall be delivered to an independent third party escrow or trust account in a
federally insured depository. The account may be interest bearing at the direction of either the
prospective seller or prospective buyer. Payment of any account fees and payment of interest
monies shall be as agreed to between the prospective buyer and prospective seller. All
reservation deposits shall remain in the account until cancellation or termination of the timeshare
interest reservation or execution of a purchase agreement.
4. Within fifteen calendar days after the prospective seller receives the public report approved for
use by the commissioner relating to the reserved timeshare interest, the prospective seller shall
provide the prospective buyer with a copy of the public report and a copy of the proposed
purchase agreement for the sale of the timeshare interest. The prospective buyer and
prospective seller shall have seven business days after the prospective buyer’s receipt of the
public report and the proposed purchase agreement to enter into a contract for the purchase of
the timeshare interest. If the prospective buyer and prospective seller do not enter into a contract
for the purchase of the timeshare interest within the seven business day period, the reservation
automatically terminates. The prospective seller has no cancellation rights concerning a
timeshare interest reservation other than as provided in this subsection.
5. A prospective buyer may cancel a timeshare interest reservation at any time before the
execution of a purchase agreement by delivering written notice of termination to the prospective
seller as provided in paragraph 9 of this subsection.
6. Within five business days after a timeshare interest reservation has been terminated for any
reason the prospective seller shall refund to the prospective buyer all reservation deposits made
by the prospective buyer including any interest monies earned less any account fees agreed on if
applicable. The independent third party escrow account or trust account agent shall refund to the
prospective buyer all reservation deposits made by the prospective buyer including any interest
monies earned less any account fees agreed on if the prospective seller is not available. After
the refund neither the prospective buyer nor the prospective seller has any obligation arising out
of the timeshare interest reservation.
7. A prospective buyer may not transfer rights under a reservation without the prior written
consent of the prospective seller, and any purported transfer without the consent of the
prospective seller is voidable at the sole discretion of the prospective seller.
8. If the department denies an application for a public report on a timeshare plan on which
timeshare interest reservations were taken, within five business days of notification by the
department the prospective seller shall notify in writing each prospective buyer who entered into a
timeshare interest reservation agreement. The prospective seller shall return any reservation
deposits previously taken.
9. All notices required by this section to be given to the department, the prospective buyer or the
prospective seller shall be in writing and either hand delivered or sent by certified mail, return
receipt requested with postage fully prepaid. Notices sent by mail are deemed delivered on the
earlier of actual receipt, as evidenced by the delivery receipt, or seven calendar days after being
deposited in the United States mail.
10. Each timeshare interest reservation form shall contain the following statement in conspicuous
type:
The Arizona department of real estate has not inspected or approved this timeshare property and
no public report has been issued for the timeshare plan. No offer to sell may be made and no
offer to purchase may be accepted before issuance of a public report or pre-sale authorization for
the timeshare plan.
C. The commissioner may deny, suspend or revoke authorization to accept timeshare interest
reservations under this section to any person who has violated any provision of this chapter.
32-2197.11. Developer supervisory duties
The developer shall supervise, manage and control all aspects of the offering of the timeshare plan,
including promotion, advertising, contracting and closing. The developer is responsible for each
timeshare plan registered by the developer with the department and for the actions of any sales agent or
managing entity used by the developer in the offering or selling of any registered timeshare plan. Any
violation of this article that occurs during the offering activities shall be deemed to be a violation by the
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developer as well as by the sales agent or managing entity who actually committed the violation. The
developer is responsible for the actions of the association and managing entity only while they are subject
to the developer’s control, as provided in the timeshare instruments or by law.
32-2197.12. Blanket encumbrance; lien; alternative assurance
Excluding any encumbrance placed against the purchaser’s timeshare interest securing the purchaser’s
payment of purchase money financing for the purchase, the developer is not entitled to the release of any
monies placed in escrow under section 32-2197.05 with respect to each timeshare interest and any other
property or rights to property appurtenant to the timeshare interest, including any amenities represented
to the purchaser as being part of the timeshare plan, until the developer has provided satisfactory
evidence to the commissioner of one of the following:
1. The timeshare interest together with any other property or rights to property appurtenant to the
timeshare interest, including any amenities represented to the purchaser as being part of the
timeshare plan, are free and clear of any of the claims of the developer, any owner of the
underlying fee, a mortgagee, judgment creditor or other lienor or any other person having a
blanket encumbrance against the timeshare interest or appurtenant property or property rights.
2. The developer, any owner of the underlying fee, a mortgagee, judgment creditor or other lienor
or any other person having a blanket encumbrance against the timeshare interest or appurtenant
property or property rights, including any amenities represented to the purchaser as being part of
the timeshare plan, has recorded a subordination and notice to creditors document in the
appropriate public records of the jurisdiction in which the timeshare interest is located. The
subordination document shall expressly and effectively provide that the interest holder’s right or
blanket encumbrance does not adversely affect and is subordinate to the rights of the owners of
the timeshare interests in the timeshare plan regardless of the date of purchase, from and after
the effective date of the subordination document.
3. The developer, any owner of the underlying fee, a mortgagee, judgment creditor or other lienor
or any other person having a blanket encumbrance against the timeshare interest or appurtenant
property or property rights, including any amenities represented to the purchaser as being part of
the timeshare plan, has transferred the subject accommodations or amenities or all use rights to
the accommodations or amenities to a nonprofit organization or owners’ association to be held for
the use and benefit of the owners of the timeshare plan. The organization or association shall act
as a fiduciary to the purchasers, if the developer has transferred control of the organization or
association to the owners or does not exercise voting rights in the organization or association with
respect to the subject accommodations or amenities. Before the transfer, any blanket
encumbrance against the accommodation or facility shall be made subject to a subordination and
notice to creditors instrument pursuant to paragraph 2.
4. Alternative arrangements have been made that are adequate to protect the rights of the
purchasers of the timeshare interests and approved by the commissioner.
32-2197.13. Hearing on denial of public report
Any applicant objecting to the denial of a public report may, within thirty days after receipt of the order of
denial, file a written request for a hearing. The commissioner shall hold the hearing within twenty days
thereafter unless the party requesting the hearing requests a postponement. If the hearing is not held
within twenty days after a request for a hearing is received, plus the period of any such postponement, or
if a proposed decision is not rendered within forty-five days after submission, the order of denial shall be
rescinded and a public report issued.
32-2197.14. Investigations; orders; hearings
A. The commissioner, on the commissioner's own motion, or if the commissioner has received a
complaint and has satisfactory evidence that the owner, agent or developer is violating any provision of
this article or rules of the commissioner or has engaged in any unlawful practice as defined in section 441522 concerning the sale of timeshare interests or deviated from the provisions of the public report, may
investigate the timeshare property and examine the books and records of the owner, agent or developer.
For the purpose of examination, the owner, agent or developer shall keep and maintain records of all
sales transactions and monies received pursuant to such sales transactions and make them accessible to
the commissioner upon reasonable notice and demand.
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B. The commissioner may conduct an investigation, issue a summary order as provided in section 322157 or hold a public hearing, on the commissioner's own motion, or if the commissioner has received a
complaint and has satisfactory evidence that:
1. A person has violated any of the provisions of this article or the rules of the commissioner.
2. A person has engaged in any unlawful practice as defined in section 44-1522 concerning the
sale of timeshare interests.
3. A person has deviated from the provisions of the public report.
4. The owner, agent, developer, officer or partner, developer trust beneficiary or, if a corporation,
any stockholder owning ten per cent or more of the stock in such corporation has participated in,
operated or held an interest in any land development company which is bankrupt or has been
indicted for fraud or against whom an information for fraud has been filed or has been convicted
of a felony, before or after the commissioner issues the public report.
C. After such hearing, the commissioner may issue such order or orders as the commissioner deems
necessary to protect the public interest and ensure compliance with the law, or rules or public report, or
may bring an action in any court of competent jurisdiction against the person to enjoin the person from
continuing such violation or engaging in such violation or doing any act or acts in furtherance of such
violation. The court may make such orders or judgments, including the appointment of a receiver, as are
necessary to prevent the use or employment by a person of any unlawful practices or which are
necessary to restore to any person in interest any monies or property, real or personal, which has been
acquired by means of any practice declared to be unlawful in this article.
D. For any timeshare investigation made under this section of an out-of-state timeshare plan, or any instate timeshare plan to which the commissioner issues any order necessary to protect the public interest
and ensure compliance with law, rules or the public report, the developer shall reimburse the department
for travel and subsistence expenses incurred by the department.
32-2197.15. Order; appointment of receiver; writ of ne exeat
A. If it appears to the commissioner that a person has engaged in or is engaging in a practice declared to
be unlawful by this article, and that such person is concealing assets or self, or has made arrangements
to conceal assets or is about to leave this state, the commissioner may apply to the superior court, ex
parte, for an order appointing a receiver of the assets of such person or for a writ of ne exeat, or both.
B. The court, upon receipt of an application for the appointment of a receiver or for a writ of ne exeat, or
both, shall examine the verified application of the commissioner and such other evidence that the
commissioner presents to the court. If satisfied that the interests of the public require the appointment of a
receiver or the issuance of a writ ne exeat without notice, the court shall issue an order appointing the
receiver or issue the writ, or both. If the court determines that the interests of the public will not be harmed
by the giving of notice, the court shall set a time for a hearing and require such notice be given as the
court deems satisfactory.
C. If the court appoints a receiver without notice, the court shall further direct that a copy of the order
appointing a receiver be served upon the person engaged in or engaging in a practice declared to be
unlawful under this article by delivering such order to the last address of the person which is on file with
the real estate department. The order shall inform the person that he has the right to request a hearing
within ten days of the date of the order, and if requested, the hearing shall be held within thirty days from
the date of the order.
32-2197.17. Advertising and promotional requirements; telemarketing and promotional
employees; presentations and tours, drawings and contests; commissioner's authority;
disclosures
A. Within ten days after a request by the commissioner, the developer shall file with the commissioner a
copy of any promotional and advertising material that will be used in connection with the sale, lease or
use of timeshare interests. If filing is required, the commissioner shall approve or deny the use of any
material within fifteen days of receiving all information and documents. If the commissioner denies the
use of promotional and advertising material, specific grounds shall be set forth in writing. The
commissioner may grant provisional approval for promotional and advertising material if the developer
agrees to correct any deficiencies. Any proposed advertising not requested by the commissioner for
review may be filed for review and approval by the commissioner.

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B. Any advertising, communication or sales literature of any kind, including oral statements by
salespeople or any other person, shall not contain:
1. Any untrue statement of material fact or any omission of material fact which would make such
statements misleading in light of the circumstances under which such statements were made.
2. Any statement or representation that the timeshare interests are offered without risk or that
loss is impossible.
3. Any statement or representation or pictorial presentation of proposed improvements or
nonexistent scenes without clearly indicating that the improvements are proposed and the scenes
do not exist.
C. All promotional and advertising material shall be consistent with the information contained in the notice
of intention pursuant to section 32-2197.02 and the public report pursuant to section 32-2197.08 and shall
clearly indicate that the material is being used to promote the sale, lease or use of an interest in a
timeshare plan. An interest in a timeshare plan, vacation ownership plan, fractional ownership plan,
vacation club or other term or terms may be approved by the commissioner on a case by case basis after
the commissioner finds that such term or terms clearly disclose to prospective purchasers the nature of
the timeshare interest being offered.
D. If it appears to the commissioner that any person is engaging or has engaged in advertising or
promotional practices in violation of this article, the commissioner may hold a hearing as a contested case
under title 41, chapter 6, article 10 and issue such order or orders as the commissioner deems necessary
to protect the public interest, or the commissioner may bring an action in any court of competent
jurisdiction against such person to enjoin that person from continuing such violation.
E. The commissioner may adopt such written guidelines as the commissioner deems necessary to protect
the public interest and to assure that all advertising and promotional practices with respect to land subject
to the provisions of this article are not false or misleading.
F. It is unlawful for any owner, developer, agent or employee of any timeshare plan or other person with
intent directly or indirectly to sell or lease timeshare interests subject to the provisions of this article to
authorize, use, direct or aid in any advertising, communication, sales literature or promotional practice
which violates this section.
G. This section does not apply to the owner or publisher of a newspaper or magazine or to any other
publication of printed matter in which such advertisement appears or to the owner or operator of a radio
or television station which disseminates such advertisement if the owner, publisher or operator has no
knowledge of the intent, design or purpose of the advertiser.
H. A telemarketing or any other promotional employee involved in activities whose primary duties are
limited to soliciting initial interest, scheduling or confirming persons for appointments, handing out
promotional literature or explaining promotional incentives and related duties is not required to hold a real
estate license. To the extent that a telemarketing or any other promotional employee is engaged in
soliciting interest in the actual purchase, lease or use of timeshare interests, the employee shall be
employed and supervised by a real estate broker who is licensed in this state subject to the following:
1. Supervision of unlicensed telemarketing and other promotional employees shall be performed
directly by a broker or a licensed real estate salesperson under the supervision of the broker.
2. An unlicensed employee in the course of the employee's duties shall not engage in discussions
about any details or benefits of the property transaction being promoted, including dimensions of
the property, contract terms, discounts, exchange benefits, price and financing.
3. The amount and manner in which an unlicensed employee is individually compensated may
not be based, in whole or in part, on the completion of a timeshare transaction.
4. For the purposes of the supervision required under this subsection, a developer may:
(a) Operate its own promotional program and provide supervision of its unlicensed
telemarketing or other promotional employees through its designated broker.
(b) Establish a branch office that is managed by a licensed real estate salesperson under
the supervision of the developer's designated broker and who provides supervision of the
developer's unlicensed telemarketing or other promotional employees.
(c) Pursuant to a written promotion agreement:
(i) Contract with an unlicensed telemarketer or any other promoter if the
agreement requires the developer's designated broker to provide supervision of
the telemarketer's or promoter's unlicensed telemarketing or other promotional
employees.
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(ii) Contract with a telemarketer or any other promoter who is licensed as a
broker in this state if the agreement requires the designated broker of the
telemarketer or other promoter to provide supervision of unlicensed
telemarketing or other promotional employees.
5. The commissioner may exempt from the supervision requirements of this section a timeshare
developer that is not based in this state and that desires to conduct telemarketing solicitations of
residents of this state or a developer that is based in this state but that desires to use the services
of a telemarketer that is not located in this state to conduct telemarketing solicitations of residents
of this state on written application containing information about the developer, the timeshare plan
and the marketing procedures that will be used. The commissioner may grant such an exemption
on a showing that supervision equivalent to that required under this section exists. If the
developer does not adhere to the marketing procedures submitted with its application for
exemption or if there is any material change in the information submitted with the application, the
exemption may be denied or revoked.
I. A timeshare developer may hold a drawing or contest to solicit interest in or promote timeshare interests
if all of the following requirements are met:
1. The timeshare plan has in effect a current public report.
2. The developer is not the subject of an ongoing investigation by the commissioner, unless the
commissioner in the commissioner's discretion gives written permission to the developer to hold a
drawing or contest.
3. The extent to which the drawing or contest is limited in time and scope and the geographic
location in which eligible recipients reside are fully disclosed.
4. The estimated odds of winning and all other material terms of the drawing or contest are fully
disclosed to all participants.
5. No fee is charged to any person who participates in a drawing or contest.
6. No participant in a drawing or contest, as a condition of participation, is required to attend a
timeshare sales presentation or take a site tour.
7. The developer is in compliance with all applicable federal, state and local laws involving
drawings or contests.
8. The developer is responsible at all times for the lawful and proper conduct of any drawing or
contest.
9. The developer submits the details of the drawing or contest, including the method of awarding
any offered.
J. A premium may be given to persons who visit timeshare properties or who attend a timeshare
presentation. No person is required to attend any presentation or tour for longer than one hundred twenty
minutes to receive the premium. The developer shall make complete and clear written disclosure that
minimally includes detailed information about any premium offered as an incentive, including its estimated
retail value and any conditions that must be met or limitations that apply to receive the premium, and
about the one hundred twenty minute limit placed on a site tour or sales presentation to each timeshare
prospect before any presentation or tour.
K. A developer or a representative of a developer conducting timeshare presentations or tours may offer
a timeshare prospect a redemption certificate in return for participation in a presentation or tour if all of the
following requirements are met:
1. If for any reason the goods or services are not provided in the time frame stated in or are not
as represented in the redemption certificate and the recipient provides proof of timely satisfaction
of all conditions and requirements for redemption, the developer does the following:
(a) Within fifteen days of receipt of notice from the timeshare prospect of the proven
nonreceipt of the goods or services, provides the promised goods or services or a
reasonable substitute of equal or greater value.
(b) If unable to provide the goods or services or a reasonable substitute within the fifteen
day period, immediately pays the redemption certificate recipient an amount equal to the
estimated retail value of the premium as advertised in the certificate promotional material
or, if the value was not advertised, pays the estimated retail value of the premium.
2. All advertising and offers referring to redemption certificates shall clearly and conspicuously set
forth any terms, conditions, restrictions or limitations governing the use of the certificates.

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L. The disclosure required by subsection C of this section shall be provided as part of the initial
advertising promotion contact with a prospective purchaser. Any other disclosures required pursuant to
this section shall be provided before the prospective purchaser is required to pay any money or attend a
sales presentation pursuant to the advertising promotion. The disclosures shall be given to each
prospective purchaser on only one piece of advertising for each advertising promotion, including
advertising promotions that consist of multiple related pieces. If advertising promotions are approved as
multiple related pieces, the advertising promotion must be used in that form. If the advertising promotion
contains terms and conditions the disclosures required in this section shall be included on any piece
containing these terms and conditions. Repetitive filings of the same advertising material are not
required.
32-2197.18. Recording of actions
A. If the commissioner issues a cease and desist order, obtains a court order enjoining further sales,
issues an order of prohibition or suspends approval of a timeshare plan, the action shall be recorded in
the book of deeds in the office of the county recorder in any county in which the timeshare property is
located.
B. In the event of revocation of any of the orders which require recording in subsection A, an order of
release shall be recorded in the same manner.
32-2197.19. Civil liabilities; prohibitions; limitations
A. If any part of the notice of intention filed pursuant to section 32-2197.02 contains an untrue statement
of a material fact or omits a material fact required to be stated in such notice, the developer or agent is
liable as provided in this section to any person who acquires a timeshare interest in the timeshare plan
covered by the notice of intention during the period the notice of intention remained uncorrected, unless it
is proved that at the time of such acquisition the person acquiring the timeshare interest knew of such
untruth or omission.
B. A developer or agent who sells or leases a timeshare interest in a timeshare plan in violation of section
32-2197.09 or by means of a public report which contains an untrue statement of a material fact, or omits
a material fact required to be stated in such report, is liable to the purchaser of such timeshare interest as
provided in this section.
C. No developer or agent shall, in selling or leasing, or offering to sell or lease, any timeshare interest in a
timeshare plan:
1. Employ any device, scheme or artifice to defraud.
2. Obtain money or property by means of a material misrepresentation with respect to any
information included in the notice of intention or the public report or with respect to any other
information pertinent to the timeshare interest or timeshare plan and upon which the purchaser
relies.
3. Engage in any transaction, practice or course of business which operates or would operate as
a fraud or deceit upon a purchaser.
D. Damages in any suit brought pursuant to this section are the difference between the amount paid for
the timeshare interest, together with the reasonable cost of improvements to such timeshare interest, and
whichever of the following amount is less:
1. The value of the timeshare interest and improvements as of the time such suit was brought.
2. The price at which the timeshare interest was disposed of in a bona fide market transaction
prior to the suit.
3. The price at which the timeshare interest was disposed of in a bona fide market transaction
after suit was brought, but prior to judgment.
E. In any action in which a violation of this section is established, the purchaser is also entitled to recover
reasonable attorney fees as determined by the court. If a violation is not established, the court may award
reasonable attorney fees to the defendant.
F. Every person who becomes liable to make any payment pursuant to this section may recover
contribution as in cases of contract from any person who, if sued separately, would have been liable to
make the same payment.
G. The amount recoverable pursuant to this section shall not exceed the sum of the purchase price of the
timeshare interest, the reasonable cost of improvements installed by the purchaser and reasonable court
costs and attorney fees.
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H. This section does not preclude any other remedies that may exist at law or in equity.
I. An action shall not be maintained to enforce any liability created pursuant to subsection A or B of this
section unless brought within one year after the discovery of the untrue statement or the omission, or
after such discovery should have been made by the exercise of reasonable diligence. An action shall not
be maintained to enforce any liability created pursuant to subsection C of this section unless brought
within two years after the violation upon which it is based. Any such action under subsection C of this
section shall not be brought by a purchaser more than three years after the sale or lease to such
purchaser.
32-2197.20. Civil penalty
A. Any developer who is subject to the jurisdiction of the department and who has violated any provision
of this article or any rule or order adopted by the commissioner, who has deviated substantially from the
provisions of a public report or who has engaged in any unlawful practices defined in section 44-1522
with respect to the sale or lease of timeshare interests may be assessed a civil penalty by the
commissioner, after a hearing, in an amount of at least one thousand dollars and not more than five
thousand dollars per infraction.
B. Actions to recover penalties pursuant to this section shall be brought by the attorney general in the
name of this state in the superior court in the county in which the violation occurred or in a county in
which the commissioner maintains an office.
32-2197.21. Payment of finder fees; limits; prohibited activities; records; definition
A. Notwithstanding sections 32-2155, 32-2163 and 32-2165 or any other provision of this chapter, a
developer or managing entity may pay a finder fee to a person who is not licensed pursuant to this
chapter and who owns a timeshare interest in the developer’s timeshare plan or in the timeshare plan
managed by that managing entity.
B. A finder fee paid pursuant to this section shall not exceed one thousand dollars in credit or
nonmonetary compensation during any twelve month period.
C. This section does not permit a person who is not licensed pursuant to this chapter to advertise or
promote the person’s services in procuring or assisting to procure prospective timeshare interest
purchasers.
D. The developer or managing entity shall keep records of all finder fees paid pursuant to this section for
three years after the payment is made.
E. For purposes of this section, "finder fee" means credit or nonmonetary compensation paid to a person
who is not licensed pursuant to this chapter, who owns a timeshare interest and who provides the name
and address of a prospective purchaser to the developer or managing entity of the timeshare plan in
which the owner previously purchased a timeshare interest.
32-2197.22. Exemptions; disclosures; exempt communications
A. Sections 44-1841 and 44-1842 do not apply to a timeshare plan that has been issued a timeshare
public report pursuant to this article or exempted by special order of the commissioner.
B. A person is exempt from this article if any of the following applies:
1. The person is either an owner of a timeshare interest or a real estate broker who represents an
owner of a timeshare interest if the owner acquired the timeshare interest for the owner's own use
and occupancy and offers it for resale.
2. The person is a managing entity or an association or a designated agent of a managing entity
or association if all of the following apply:
(a) The entity or association is not a developer of a timeshare plan.
(b) The person solely acts as an association or is under a contract with an association to
offer or sell a timeshare interest transferred to the association through foreclosure, deed
or gratuitous transfer if done in the regular course of, or incident to, the management of
the association for the management's account in the timeshare plan.
(c) The managing entity or the association provides to each purchaser who is not an
existing owner in the timeshare plan, the following disclosures before execution of the
purchase agreement:
(i) The name and address of the timeshare plan and of the managing entity of the
timeshare plan.
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(ii) The following statement in conspicuous type located before the disclosure
required by item (vi) of this subdivision:
The current year’s assessment for common expenses allocable to the timeshare
interest you are purchasing is $_______. This assessment, which may be
increased periodically by the managing entity of the timeshare plan, is payable in
full each year on or before ________. This assessment (includes/does not
include) yearly ad valorem real estate taxes that (are/are not) billed and collected
separately.
(iii) If ad valorem real property taxes are not included in the current year’s
assessment for common expenses, the following statement must be in
conspicuous type located immediately after the disclosure required by item (ii) of
this subdivision:
The most recent annual assessment for ad valorem real estate taxes for the
timeshare interest you are purchasing is $______.
(iv) If there are any delinquent assessments for common expenses or ad valorem
taxes outstanding with respect to the timeshare interest in question, the following
statement must be in conspicuous type located immediately after the disclosure
required by items (ii) and (iii) of this subdivision:
A delinquency in the amount of $_______ for unpaid common expenses or ad
valorem taxes currently exists with respect to the timeshare interest you are
purchasing, together with a per diem charge of $_______ for interest and late
charges.
(v) The following statement in conspicuous type located immediately after the
disclosure required by items (ii), (iii) and (iv) of this subdivision:
Each owner is personally liable for the payment of the owner's assessments for
common expenses, and failure to timely pay these assessments may result in
restriction or loss of your use and ownership rights. There are many important
documents relating to the timeshare plan that you should review before
purchasing a timeshare interest, copies of which are available from the
association or the managing entity on request, including the declaration of
condominium or covenants and restrictions, the association articles and bylaws,
the current year’s operating and reserve budgets and any rules affecting the use
of timeshare plan accommodations and facilities.
(vi) The year in which the purchaser will first be entitled to occupancy or use of a
timeshare period associated with the timeshare interest that is the subject of the
resale purchase agreement.
3. The person offers a timeshare plan in a national publication or by electronic media, as
determined by the commissioner or as provided by rule, that is not directed to or targeted to any
individual located in the state. For purposes of this paragraph, "national publication" or
"electronic media" means publications or media circulated, distributed and broadcast on a
regional or national basis to residents of the United States and foreign countries. National
publication or electronic media includes radio, newspapers, television, the internet and other
media that is not intentionally directed to or targeted to individuals located in this state. The
sending of a direct solicitation or electronic mail message to the internet address of an individual
known to be located in this state is not an offer through a national publication or electronic media.
4. The person has acquired twelve or more timeshare interests in one or more voluntary or
involuntary transactions and subsequently conveys, assigns or transfers twelve or more of the
timeshare interests received to a single purchaser in a single transaction during the preceding
twelve month period.
C. The following are exempt communications from the provisions of this article:
1. Any stockholder communication including an annual report or interim financial report, proxy
material, a registration statement, a securities prospectus, a registration, a property report or
other material required to be delivered to a prospective purchaser by an agency of any state or
the federal government.
2. Any oral or written statement disseminated by a developer to broadcast or print media, other
than paid advertising or promotional material, regarding plans for the acquisition or development
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of timeshare property. Any rebroadcast or any other dissemination of such oral statements to a
prospective purchaser by a seller in any manner or any distribution of copies of newspaper or
magazine articles or press releases or any other dissemination of written statements to a
prospective purchaser by a seller in any manner constitutes an advertisement and is not an
exempt communication.
3. Any advertisement or promotion in any medium to the general public if the advertisement or
promotion clearly states that it is not an offer in any jurisdiction in which any applicable
registration requirements have not been fully satisfied.
4. Any audio, written or visual publication or material relating to the availability of any
accommodations for transient rental if a sales presentation is not a requirement for the availability
of the accommodations and if the failure of any transient renter to take a tour of a timeshare
property or attend a sales presentation does not result in any reduction in the level of services
that would otherwise be available to the transient renter.
5. Any billboard or other sign that is affixed to real or personal property and that is not
disseminated by other than visual means to any prospective purchaser and that does not suggest
or invite any action on the part of the prospective purchaser.
D. The following communications are exempt from this article if the communications are delivered to any
person who has previously executed a contract for the purchase of or is an existing owner of a timeshare
interest in a timeshare plan:
1. Any communication addressed to and relating to the account of any person who has previously
executed a contract for the sale or purchase of a timeshare interest in a timeshare plan relating to
the communication.
2. Any audio, written or visual publication or material relating to an exchange company or
exchange program provided to an existing member of the exchange company or exchange
program.
3. Any communication by a developer to encourage a person who has previously acquired a
timeshare interest from the developer to acquire additional use or occupancy rights or benefits or
additional timeshare interests offered by the same developer.
32-2197.23. Power of commissioner to exempt timeshare plans
A. The commissioner may by special order exempt from the provisions of this article timeshare plans
upon written petition and upon a showing by the petitioner, satisfactory to the commissioner, that
compliance with the provisions of this article is not essential to the public interest or for the protection of
purchasers by reason of the special characteristics of the timeshare plan.
B. Special orders issued pursuant to this section shall relate to specific timeshare plans.
C. A petition filed under this section shall be accompanied by an initial fee of three hundred dollars. A fee
is not returnable irrespective of the nature of the action upon the petition.
32-2197.24. Applicability of article
A. This article applies to all of the following:
1. A timeshare property located in this state.
2. Timeshare plans with an accommodation or component site in this state if those timeshare
plans are sold or offered to be sold to any individual located in this state.
3. Timeshare plans without an accommodation or component site in this state if the timeshare
plans are sold or offered to be sold to any individual located in this state.
B. This article does not apply to the following:
1. An exchange program except as provided in subsection C.
2. Timeshare plans consisting of fewer than twelve timeshare interests whether or not an
accommodation is located in this state.
3. Timeshare plans the use of which extends over any period of less than three years.
4. Timeshare plans, whether or not an accommodation is located in this state, under which the
prospective purchaser’s total financial obligation will be less than one thousand five hundred
dollars during the entire term of the timeshare plan.
C. A method, arrangement or procedure that meets the definition of an exchange program pursuant to
section 32-2197 shall be regulated as a timeshare plan in accordance with this article if the purchaser's

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total contractual financial obligation exceeds three thousand dollars for any individual, recurring timeshare
period.

Article 10 Membership Camping
32-2198. Unlawful offer or sale of membership camping contract
It is unlawful for any person to offer to sell or to sell within or from this state a membership camping
contract unless a final membership camping public report has been issued by the commissioner. Any sale
of a membership camping contract before the issuance of the final public report is voidable by the
purchaser.
32-2198.01. Application for membership camping public report; signature; amendment
A. An application for a membership camping public report shall contain the following documents and
information:
1. The name and address of the membership camping operator.
2. A copy of the articles of incorporation, partnership agreement or joint venture agreement and
the camping club association bylaws as contemplated or currently in effect.
3. A list of all officers and directors or persons occupying a similar status of the membership
camping operator including their names, addresses and occupations during the last five years.
4. A list of material affiliates of the membership camping operator, including the names and
addresses of partners, officers, directors and persons with a direct or indirect interest of ten per
cent or more in the membership camping operator.
5. A list of all owners of over ten per cent of the voting stock of the membership camping
operator, except that this list is not required if the membership camping operator is a reporting
company under the securities and exchange act of 1934.
6. Copies of forms of all advertisements intended to be used in connection with the offer or sale of
membership camping contracts within this state.
7. A copy of each type of membership camping contract to be sold, a description of the purchase
price of each type and, if the price varies, the reason for the variance.
8. A copy of any conditional use permit or any other major use permits indicating approval of the
project by this state or a political subdivision of this state for each of the membership camping
operator's camping projects located in this state. If the membership camping operator has no
projects in this state, the same documents shall be provided for all out of state projects for which
membership contracts are to be sold or offered for sale in this state.
9. The financial statements of the membership camping operator prepared in accordance with
generally accepted accounting principles and audited by an independent certified public
accountant.
10. A statement of the total number of membership camping contracts intended to be sold in this
state and the method used to determine this number including a statement of commitment that
this total number will not be exceeded unless it is disclosed by an amendment to the registration.
11. If membership camping contracts are sold with different privileges or durations, a list of each
type of membership camping contract and the approximate number of each type to be sold.
12. A copy of the agreement, if any, between the operator and any person owning, controlling or
managing the campground.
13. The names of any other states or foreign countries in which an application for registration of
the membership camping operator or the membership camping contract or any similar document
has been filed.
14. Complete information concerning any adverse order, judgment or decree involving forgery,
theft, extortion, conspiracy to defraud, a crime of moral turpitude or any other like conduct which
has been entered by a court or administrative agency in connection with a campground or other
business operated by the applicant or in which the applicant has or had an interest at the time of
the acts which led to the order, judgment or decree.
15. A current title report which is signed and dated not more than thirty days before receipt by the
commissioner and which provides a true statement of the condition of the title to the campground
property, including all encumbrances on the property.

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16. A statement on the provisions that have been made for permanent access and provisions, if
any, for health department approved sewage and solid waste collection and disposal and public
utilities, if any, in the proposed campground, including water, electricity, gas and telephone
facilities.
17. A statement of the provisions, if any, limiting the use or occupancy of the campground,
together with copies of any restrictive covenants affecting all or part of the campground.
18. A true statement of the approximate amount of indebtedness which is a lien on the
campground or any part of the campground and which was incurred to pay for the construction of
any on-site or off-site improvement or any community or recreational facility.
19. A true statement or reasonable estimate, if applicable, of the amount of any indebtedness
which has been or is proposed to be incurred by an existing or proposed special district, entity,
taxing area or assessment district within the boundaries of which the campground or any part of
the campground is located, and which is to pay for the construction or installation of any
improvement or to furnish community or recreational facilities to the campground, and which
amounts are to be obtained by ad valorem tax or assessment, or by a special assessment or tax
on the campground or any part of the campground.
20. A true statement as to the approximate amount, if any, of annual taxes, special assessments
or fees to be paid by the membership camping contract owner for the proposed annual
maintenance of common facilities in the campground.
21. A true statement of assurances for the installation of improvements, such as roads and
utilities, and approval by the political subdivision having authority.
22. A true statement of provisions made for financing any community, recreational or other
facilities to be included in the offering or represented as being in the offering. The statement shall
include a trust agreement or other evidence of assurances for delivery of such facilities and a
statement of the provisions, if any, for the continued maintenance of the facilities.
23. A true statement of the nature of any improvements to be installed or represented to be
installed, the estimated schedule for completion and the estimated costs related to these
improvements which will be borne by membership camping contract owners in the campground.
24. A true statement of the membership camping operator's experience in the membership
camping business, including the number of years the operator has been in the membership
camping business.
25. A true statement of the nature of the purchaser's right or license to use the membership
camping operator's property or facilities.
26. The location of each of the membership camping operator's parks and a brief description for
each park of the significant facilities then available for use by purchasers and those which are
represented to purchasers as being planned, together with a brief description of any significant
facilities that are or will be available to nonpurchasers or nonmembers. As used in this paragraph
"significant facilities" includes campsites, swimming pools, tennis courts, recreation buildings, rest
rooms and showers, laundry rooms and trading posts or grocery stores.
27. A true statement of the membership camping operator's ownership of or other right to use the
camping properties represented to be available for use by purchasers, together with the duration
of any lease, license, franchise or reciprocal agreement entitling the membership camping
operator to use the property, and any material provisions of any agreements which restrict a
purchaser's use of the property.
28. A copy of the rules, restrictions or covenants regulating the purchaser's use of the
membership camping operator's properties, including a statement of whether and how the rules,
restrictions or covenants may be changed.
29. A description of any restraints on the transfer of the membership camping contract.
30. A true statement of the policies relating to the availability of camping sites and whether
reservations are required.
31. A true statement of any grounds for forfeiture of a purchaser's membership camping contract.
32. Any other information, documents and certificates as the commissioner may reasonably
require to clarify or ascertain the accuracy of the information required by this section.
B. The application shall be signed by the membership camping operator, an officer or general
partner of the membership camping operator or by another person holding a power of attorney for
this purpose from the membership camping operator. If the application is signed pursuant to a
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power of attorney, a copy of the power of attorney or the resolution authorizing the signature shall
be included with the application.
C. The application must be submitted on a form prescribed by the commissioner with the
application fee.
D. An application for registration to offer to sell or sell membership camping contracts shall be
amended when a material change to the information previously filed occurs.
32-2198.02. Issuance of public report; representations prohibited
A. On examination of a membership campground, the commissioner, unless there are grounds for denial,
shall issue to the owner or operator a public report authorizing the sale in or from this state of
membership camping contracts. The report shall contain the data obtained in accordance with section 322198.01 and any other information which the commission determines is necessary to implement the
purposes of this article. The commissioner shall require the owner or operator to reproduce the report and
furnish each purchaser with a copy, taking a receipt. The owner and licensed broker shall each retain a
receipt for at least five years from the date of its taking.
B. The issuance of a public report is not deemed to be an endorsement by the commissioner of the
membership camping contract, the operator or the campground. It is unlawful for a person to make or use
any statement or promotional device which tends to indicate that issuance constitutes an endorsement.
32-2198.03. Exemptions
A. The following transactions are exempt from the provisions of section 32-2198:
1. An offer, sale or transfer by any one person of not more than one membership camping
contract in any twelve month period any agent for the person, participating in more than one
transaction in a twelve-month period is not exempt from registration as a membership camping
salesperson under this chapter if he receives a commission or similar payment for the sale or
transfer.
2. An offer or sale by a government or subdivision of a government agency.
3. An offer, sale or transfer by a membership camping operator of a membership camping
contract previously authorized if the offer, sale or transfer constitutes a transfer to an owner other
than the original owner of the contract.
B. The commissioner may by special order exempt from the provisions of section 32-2198 the offer for
sale or the sale of membership camping contracts on written petition and a showing by the petitioner
satisfactory to the commissioner that compliance with this chapter is not essential to the public interest or
for the protection of purchasers.
32-2198.04. Examination of project by commissioner
The commissioner, pursuant to an investigation conducted under section 32-2108 or an application for
public report pursuant to section 32-2198.01, may examine any membership campground project offered
or sold in this state and make his findings public. The total cost of travel and subsistence expenses
incurred by the department in the examination shall be borne by the owner of the project on the basis of
the actual cost to the department.
32-2198.05. Contracts; cancellation
A membership camping contract may be cancelled by a resident purchaser for any reason at any time
before midnight of the third business day after the purchaser has signed and received a copy of the
contract. A membership camping contract may be cancelled by a nonresident purchaser for any reason at
any time before midnight of the seventh calendar day after the purchaser has signed and received a copy
of the contract. To cancel a contract the purchaser may notify the campground operator of the
cancellation in writing, by certified mail return receipt requested, or personal delivery, to an address in this
state as specified in the contract. Proof of timely cancellation is satisfied if the certified letter is
postmarked on or before midnight of the seventh day. All monies paid pursuant to the cancelled contract
shall be fully refunded within thirty days of receipt of the notice of cancellation. If the purchaser executed
any credit or loan agreement through the campground operator to pay all or part of the camping services,
the debt and security instruments shall also be returned within thirty days. The contract shall contain a
conspicuous notice printed in at least ten point bold-faced type as follows:
Notice to purchaser
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You are entitled to a copy of this contract at the time you sign it.
You may cancel this contract at any time, if a resident of this state, before midnight of the third
business day or if a nonresident of this state before midnight of the seventh calendar day after
receiving a signed copy of this contract. If you choose to cancel this contract, you must either:
1. Send a signed and dated written notice of cancellation by certified mail, return receipt
requested.
2. Personally deliver a signed and dated written notice of cancellation to:
____________________(Name of Campground)
____________________(Address of Campground)
If you cancel this contract within the time periods set forth above, you are entitled to a full refund
of your money. If the last day for giving notice falls on a Sunday or holiday, notice is timely given
if it is mailed or delivered as specified on the next business day. Refunds must be made within
thirty days of receipt of the cancellation notice by the campground operator.
32-2198.06. Execution of notes; assignment; purchaser's defenses retained
A. A membership camping contract shall not require the execution of any note or series of notes by the
purchaser which if separately negotiated would terminate as to third parties any right of action or defense
which the customer has against the campground operator.
B. A right of action or defense arising out of a membership camping contract which the customer has
against the campground operator shall not be terminated by assignment of the contract whether or not
the assignee acquires the contract in good faith and for value.
32-2198.08. Denial, suspension or revocation of a public report
A. The commissioner may order that a public report be denied, suspended or revoked or an application
for a public report be denied if he finds that the order is necessary for the protection of purchasers or
owners of membership camping contracts and that any of the following is true:
1. The membership camping operator's advertising, sales techniques or trade practices have
been or are deceptive, false or misleading under section 44-1522.
2. The membership camping operator has failed to comply with any provision of this article or the
rules pertaining to this article.
3. The membership camping operator is not financially responsible or has insufficient capital to
warrant its offering or selling membership camping contracts or to complete proposed amenities.
4. The membership camping operator's offering of membership camping contracts has worked or
would work a fraud on purchasers or owners of membership camping contracts.
5. The membership camping operator's application or any amendment to the application is
incomplete in any material respect.
6. The membership camping operator has represented or is representing to purchasers in
connection with the offer or sale of a membership camping contract that any property, facility,
campsite or other development is planned without reasonable grounds to believe that the
property, facility, campsite or other development will be completed within a reasonable time.
7. The membership camping operator has withdrawn from use all or any substantial portion of
any campground, the rights of all purchasers at the affected location have not expired and no
adequate provision has been made to provide a substitute campground of comparable quality
and attraction in the same general area within a reasonable time after the withdrawal.
8. The membership camping operator or its agent made a representation which is false or
misleading in any application, document or statement filed with the commissioner.
9. The membership camping operator has disseminated or caused to be disseminated any false
or misleading promotional materials in connection with a campground.
10. The membership camping operator or any of his agents has failed to comply with any
representation in the final public report or membership camping contract.
11. The owner, operator, agent, officer, director or partner, trust beneficiary holding ten per cent
or more beneficial interest or, if a corporation, any stockholder owning ten per cent or more of the
stock in such corporation has:
(a) Been convicted of a felony or misdemeanor involving fraud, dishonesty, moral
turpitude or any like offense, or involving a transaction in real estate, cemetery property,
time-share intervals or membership camping campgrounds or contracts.
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(b) Been permanently or temporarily enjoined by order, judgment or decree from
engaging in or continuing any conduct or practice in connection with the sale or purchase
of real estate or cemetery property, time-share intervals, membership camping contracts
or campgrounds, or securities or involving consumer fraud or the racketeering laws of this
state.
(c) Had an administrative order entered against him by a real estate regulatory agency or
security regulatory agency.
(d) Had an adverse decision or judgment entered against him involving fraud or
dishonesty or involving the conduct of any business in or a transaction in real estate,
cemetery property, time-share intervals or membership camping campgrounds or
contracts.
(e) Disregarded or violated any of the provisions of this chapter or the rules of the
commissioner pertaining to this chapter.
(f) Participated in, operated or held an interest in any entity to which subdivision (b), (c),
(d) or (e) applies.
B. Within thirty days after receipt of the order of denial, an applicant objecting to the denial of a public
report may file a written request for a hearing. The commissioner shall hold the hearing within twenty
days thereafter unless the party requesting the hearing has requested a postponement. If the hearing is
not held within twenty days after a request for a hearing is received, plus the period of any postponement,
or if a proposed decision is not rendered within forty-five days after submisssion, the order of denial shall
be rescinded and a public report issued.
C. The commissioner, on his own motion or if he has received a complaint and has satisfactory evidence
that grounds exist as provided in subsection A of this section or that any person has deviated from the
provisions of the public report, may conduct an investigation of such matter, may issue a summary order
as provided in section 32-2157 or may hold a public hearing and, after the hearing, may issue such order
or orders as he deems necessary to protect the public interest and ensure compliance with the law, the
rules or the public report, or the commissioner may bring an action in any court of competent jurisdiction
against the person to enjoin the person from continuing the violation, engaging the violation or doing any
act in furtherance of the violation. The court may make such orders or judgments, including the
appointment of a receiver, as may be necessary to prevent the use or employment by a person of any
unlawful practices, or which may be necessary to restore to any person in interest any monies or
property, real or personal, which may have been acquired by means of any practice in this article
declared to be unlawful.
D. If the commissioner has reasonable cause to believe that a person has engaged or is engaging in a
practice declared to be unlawful by this article and that the person is concealing assets or self or has
made arrangements to conceal assets or is about to leave this state and that the public health, safety or
welfare so requires, the commissioner may apply to the superior court, ex parte, for an order appointing a
receiver of the assets of the person or for a writ of ne exeat, or both.
E. The court, on receipt of an application for the appointment of a receiver or for a writ of ne exeat, or
both, shall examine the verified application of the commissioner and any other evidence that the
commissioner may present the court. If satisfied that the interests of the public require the appointment of
a receiver or the issuance of a writ of ne exeat without notice, the court shall issue an order appointing
the receiver or issue the writ, or both. Unless the court determines that the interests of the public will be
harmed by the giving of notice, the court shall set a time for a hearing and require that such notice be
given as the court deems satisfactory.
F. If the court appoints a receiver without notice, the court shall further direct that a copy of the order
appointing a receiver be served on the person alleged to have engaged or to be engaging in a practice
declared to be unlawful under this article by delivering the order to the last address of the person which is
on file with the department. The order shall inform the person that he has the right to request a hearing
within ten days of the date of the order and, if requested, that the hearing shall be held within twenty days
from the date of the order.
G. If the commissioner determines that the managing camp operator is not financially responsible or has
insufficient capital, the commissioner may require a surety bond or if one is unobtainable, other evidence
of financial assurances in accordance with generally accepted accounting principles and generally
accepted commercial standards of financial responsibility satisfactory to the commissioner to assure the

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financial responsibility and sufficient capitalization of the membership camping operator or to assure the
completion of proposed amenities.
32-2198.09. Fees
A. Each application for a membership camping public report shall be accompanied by a fee of five
hundred dollars.
B. Each application for amendment or renewal of a public report shall be accompanied by a fee of three
hundred dollars.
C. Each application for a special order of exemption shall be accompanied by a fee of one hundred
dollars.
32-2198.10. Advertising plans; disclosures; lotteries and drawings
A. Any advertising, communication or sales literature, including oral statements by salespersons or any
other person, shall not contain:
1. Any untrue statement of material fact or any omission of material fact which would make the
statements misleading in light of the circumstances under which such statements were made.
2. Any statement or representation that the membership camping contracts are offered without
risk or that loss is impossible.
3. Any statement or representation or pictorial presentation of proposed improvements or
nonexistent scenes without clearly indicating that the improvements are proposed and the scenes
do not exist.
B. It is unlawful for any owner, developer, agent or employee of any membership camping project or other
person with intent directly or indirectly to sell membership camping contracts to authorize, use, direct or
aid in any advertising, communication, sales literature or promotional practice which violates this section.
C. This section does not apply to the owner or publisher of a newspaper or magazine or to any other
publication of printed matter in which an advertisement appears or to the owner or operator of a radio or
television station which disseminates an advertisement if the owner, publisher or operator has no
knowledge of the intent, design or purpose of the advertiser.
D. The commissioner may adopt rules permitting lotteries and drawings for the purpose of inducing
prospective buyers to attend a sales presentation or to take a campground tour and establishing
requirements and conditions for lotteries and drawings. These requirements and conditions shall include
that:
1. No membership camping operator may hold a lottery or drawing who does not also have
pursuant to section 32-2198.14 a recorded nondisturbance agreement, a bond or irrevocable
letter of credit or some other financial assurance acceptable to the commissioner. The
commissioner may require the campground operator to provide an independent auditor's report
by a certified public accountant or other expert concerning the campground operator's financial
condition.
2. No lottery or drawing may be held unless approved in advance by the commissioner.
3. The membership camping operator shall submit an application for approval of a lottery or
drawing on a form approved by the commissioner and a fee of at least one hundred dollars and
not more than two hundred fifty dollars.
4. The department shall require the applicant to pay all costs of field inspections to audit or
oversee the operation of any drawing or lottery, including mileage, lodging and time spent in the
field inspections and any experts employed to assist the department.
5. The deed, title, cash amount or other prize or guarantee of the prize shall be held by the
department or in a neutral escrow by a disinterested third party approved by the department,
pending the award of the prize to the lottery or drawing winner.
6. Any lottery or drawing shall be limited in time, scope and geographic location. The estimated
odds of winning and terms of the lottery or drawing shall be disclosed in writing to participants.
7. No fee may be charged to any person who participates in a lottery or drawing.
8. The commissioner may deny or revoke any authorization to conduct a lottery or drawing to any
person if the campground operator or broker or a salesperson violates any statute or rule adopted
or order issued by the commissioner.
9. Violations of any requirements or conditions set forth in this section or by rule shall be grounds
for the commissioner to deny future applications to hold lotteries or drawings.
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10. The membership camping broker is responsible at all times for the lawful and proper conduct
of any lottery or drawing.
E. No campground facility may be advertised or promoted in any way that appears to guarantee the
unimpeded use of or access to campground properties, if a blanket encumbrance exists on the
properties, unless a nondisturbance or other acceptable agreement has been recorded, filed and
accepted by the department pursuant to section 32-2198.14.
32-2198.11. Purchaser's remedies
A. A membership camping contract entered into in substantial reliance on any false, fraudulent or
misleading information, representation, notice or advertisement of the campground operator or its agents
is voidable at the option of the purchaser. Reasonable attorney fees shall be awarded to the prevailing
party in any action under this chapter.
B. Any waiver of the provisions of this article by the purchaser is void.
C. A purchaser who is injured by a violation of this article may bring an action for the recovery of
damages, reasonable attorney fees and, if the violation is wilful, punitive damages in the amount of five
thousand dollars per violation.
32-2198.13. Construction of this article
The provisions of this article are in addition to all other causes of action, remedies and penalties available
to this state or to the purchaser.

32-2198.14. Advertising availability of campgrounds to campground members; blanket
encumbrances
A. No membership campground may be advertised or promoted in any way that guarantees the
unimpeded use of or access to the campground's properties unless the membership camping operator
applies for and receives approval by filing information satisfactory to the department guaranteeing that the
purchasers of membership camping contracts cannot be denied access to and use of campground
properties pursuant to the membership camping contracts. The department may require the applicant to
pay for any costs of experts hired by the department to evaluate the application, nondisturbance clause or
financial condition of the applicant. No lien or encumbrance may be construed to deny access and use.
B. The applicant shall include satisfactory evidence that purchasers of campground memberships acquire
an unimpeded and irrevocable right of access to and use of campground properties by means acceptable
to the department, including:
1. A duly recorded nondisturbance agreement from each holder of a lien or encumbrance on a
membership campground that provides minimally for:
a) Enforcement of the agreement by individual campground members.
(b) Effectiveness of the agreement notwithstanding insolvency, bankruptcy of the
membership campground operator or sale of the campground.
c) Binding successors in interest of both the campground membership operator and each
holder of a lien or encumbrance.
(d) Alternative means to continue operation of the campground if the campground
operator, holder of a lien or encumbrance or purchaser who obtains title or possession of
the campground ceases to act as operator.
2. A bond or irrevocable letter of credit posted by the membership camping operator in an
aggregate principal amount sufficient to cover the indebtedness remaining under any lien or
encumbrance.
3. Other financial assurances reasonably acceptable to the department.

Article 11. Administrative Hearings
32-2199 Administrative Hearings
Pursuant to title 41, chapter 6, article 10, an administrative law judge shall adjudicate complaints
regarding and ensure compliance with:
1. Title 33, chapter 9 and condominium documents.
2. Title 33, chapter 16 and planned community documents.

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32-2199.01. Hearing; rights procedures
A. For a dispute between an owner and a condominium association or planned community association
that is regulated pursuant to title 33, chapter 9 or 16, the owner or association may petition the
department for a hearing concerning violations of condominium documents or planned community
documents or violations of the statutes that regulate condominiums or planned communities. The
petitioner shall file a petition with the department and pay a filing fee in an amount to be established by
the commissioner. The filing fee shall be deposited in the condominium and planned community hearing
office fund established by section 32-2199.05. On dismissal of a petition at the request of the petitioner
before a hearing is scheduled or by stipulation of the parties before a hearing is scheduled, the filing fee
shall be refunded to the petitioner. The department does not have jurisdiction to hear:
1. Any dispute among or between owners to which the association is not a party.
2. Any dispute between an owner and any person, firm, partnership, corporation, association or
other organization that is engaged in the business of designing, constructing or selling a
condominium as defined in section 33-1202 or any property or improvements within a planned
community as defined in section 33-1802, including any person, firm, partnership, corporation,
association or other organization licensed pursuant to this chapter, arising out of or related to the
design, construction, condition or sale of the condominium or any property or improvements
within a planned community.
B. The petition shall be in writing on a form approved by the department, shall list the complaints and
shall be signed by or on behalf of the persons filing and include their addresses, stating that a hearing is
desired, and shall be filed with the department.
C. On receipt of the petition and the filing fee the department shall mail by certified mail a copy of the
petition along with notice to the named respondent that a response is required within twenty days after
mailing of the petition showing cause, if any, why the petition should be dismissed.
D. After receiving the response, the commissioner or the commissioner's designee shall promptly review
the petition for hearing and, if justified, refer the petition to the office of administrative hearings. The
commissioner may dismiss a petition for hearing if it appears to the commissioner's satisfaction that the
disputed issue or issues have been resolved by the parties.
E. Failure of the respondent to answer is deemed an admission of the allegations made in the petition,
and the commissioner shall issue a default decision.
F. Informal disposition may be made of any contested case.
G. Either party or the party's authorized agent may inspect any file of the department that pertains to the
hearing, if the authorization is filed in writing with the department.
H. At a hearing conducted pursuant to this section, a corporation may be represented by a corporate
officer, employee or contractor of the corporation who is not a member of the state bar if:
1. The corporation has specifically authorized the officer, employee or contractor of the
corporation to represent it.
2. The representation is not the officer's, employee's or contractor of the corporation's primary
duty to the corporation but is secondary or incidental to the officer's, employee's or contractor of
the corporation's, limited liability company's, limited liability partnership's, sole proprietor's or other
lawfully formed and operating entity's duties relating to the management or operation of the
corporation.
32-2199.02. Orders; penalties; disposition
A. The administrative law judge may order any party to abide by the statute, condominium documents,
community documents or contract provision at issue and may levy a civil penalty on the basis of each
violation. All monies collected pursuant to this article shall be deposited in the condominium and planned
community hearing office fund established by section 32-2199.05 to be used to offset the cost of
administering the administrative law judge function. If the petitioner prevails, the administrative law judge
shall order the respondent to pay to the petitioner the filing fee required by section 32-2199.01.
B. The order issued by the administrative law judge is binding on the parties unless a rehearing is granted
pursuant to section 32-2199.04 based on a petition setting forth the reasons for the request for rehearing,
in which case the order issued at the conclusion of the rehearing is binding on the parties. The order
issued by the administrative law judge is enforceable through contempt of court proceedings and is
subject to judicial review as prescribed by section 41-1092.08.

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32-2199.04. Rehearing; appeal
A. A person aggrieved by a decision of the administrative law judge may apply for a rehearing by filing
with the commissioner a petition in writing pursuant to section 41-1092.09. Within ten days after filing
such petition, the commissioner shall serve notice of the request on the other party by mailing a copy of
the petition in the manner prescribed in section 32-2199.01 for notice of hearing.
B. The filing of a petition for rehearing temporarily suspends the operation of the administrative law
judge's action. If the petition is granted, the administrative law judge's action is suspended pending the
decision on the rehearing.
C. In the order granting or denying a rehearing, the commissioner shall include a statement of the
particular grounds and reasons for the commissioner's action on the petition and shall promptly mail a
copy of the order to the parties who have appeared in support of or in opposition to the petition for
rehearing.
D. In a rehearing conducted pursuant to this section, a corporation may be represented by a corporate
officer or employee who is not a member of the state bar if:
1. The corporation has specifically authorized such officer or employee to represent it.
2. Such representation is not the officer's or employee's primary duty to the corporation but is
secondary or incidental to such officer's or employee's duties relating to the management or
operation of the corporation.
32.2199.05. Condominium and planned community hearing office fund
A. The condominium and planned community hearing office fund is established in the department to be
administered by the commissioner. Monies in the fund are continuously appropriated. On notice from the
commissioner, the state treasurer shall invest and divest monies in the fund as provided by section 35313, and monies earned from investment shall be credited to the fund.
B. Monies in the condominium and planned community hearing office fund shall be used to reimburse the
actual costs of the office of administrative hearings in conducting hearings pursuant to section 322199.01. Monies remaining in the fund may be used by the department to offset the costs of
administering cases filed pursuant to section 32-2199.01.

Arizona Administrative Code, Title 4. Professions and occupations,
Chapter 28. State Real Estate Department
R4-28-101. Definitions
In addition to the definitions listed in A.R.S. § 32-2101 the following terms apply to this Chapter:
"Active license" or "active status license" means a current license issued by the Department to a
broker or salesperson that states the name of the broker that employs the broker or salesperson and
the location at which the salesperson or broker is employed. If referring to an employing broker, it
means a currently licensed employing broker with a currently licensed designated broker of record.
"ADEQ" means the Arizona Department of Environmental Quality.
"ADWR" means the Arizona Department of Water Resources.
"Closing" means the final step of a real estate transaction, such as when the consideration is paid, all
documents relating to the transaction are executed and recorded, or the deed is delivered or placed in
escrow.
"Credit hour" means 50 minutes of instruction.
"Course" means a class, seminar, or presentation.
"D.b.a." means `doing business as' and is a name, other than a person's legal name, authorized by the
Department for a licensee's use in conducting business.
"Distance learning course" means a course of instruction outside a traditional classroom situation
consisting of computer-based interactive instructional material, requiring completion in the credit hours
specified. A course that requires a student to read text, listen to audio tapes, or view video material
without student participation, feedback, and remedial instruction is not a distance learning course.
"Immediate family" means persons related to an individual by blood, marriage, or adoption, including
spouse, siblings, parents, grandparents, children, and grandchildren.
"Individual" means a natural person.

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"Material change" means any significant change in the size or character of the development,
development plan, or interest being offered, or a change that has a significant effect on the rights,
duties, or obligations of the developer or purchaser, or use and enjoyment of the property by the
purchaser.
"Non-resident license" means a license authorized under the provisions of 32-2122(A) issued to a
person who has been domiciled in this state for less than one year and who does not meet any of the
following:
Has an Arizona driver's license;
Has an Arizona motor vehicle registration;
Has been employed in Arizona;
Has an Arizona voter registration;
Has transferred banking services to Arizona;
Has changed permanent address on all pertinent records;
Is a domestic corporation or limited liability company;
Has filed an Arizona income tax return with the Department of Revenue during the previous or
current tax year; or
Has received benefits from any Arizona public service department or agency, such as welfare, food
stamps, unemployment benefits, or worker's compensation.
"Property interest" means a person's ownership or control of a lot, parcel, unit, share, use in a
development, including any right in a subdivided or unsubdivided land, a cemetery plot, a
condominium, a time-share interval, a membership camping contract, or a stock cooperative.
R4-28-102. Document Filing; Computation of Time
A. All documents shall be considered filed on the date received by the Department. An original or renewal
application postmarked on or before the end of the application or renewal deadline shall be considered
timely.
B. In computing any period of time allowed by these rules or by an order of the Commissioner, the day of
the act, event, or default from which the designated period of time begins to run is not included. The last
day of the period is included unless it is Saturday, Sunday, or a legal holiday in which event the period
runs until the end of the next day that is not a Saturday, Sunday, or legal holiday. Unless the time period
is specified as calendar days, when the period of time allowed is less than 11 days, intermediate
Saturdays, Sundays, and legal holidays are excluded from the computation.
R4-28-103. Licensing Time-frames
A. Overall time-frame. The Department shall issue or deny a license within the overall time-frames listed
in Table 1 after receipt of a complete application. The overall time-frame is the total of the number of days
provided for in the administrative completeness review and the substantive review.
B. Administrative completeness review.
1. The applicable administrative completeness review time-frame established in Table 1 begins
on the date the Department receives the application. The Department shall notify the applicant in
writing within the administrative completeness review time-frame whether the application is
incomplete. The notice shall specify what information is missing. If the Department does not
provide notice to the applicant, the license application shall be considered complete.
2. An applicant with an incomplete license application shall supply the missing information within
the completion request period established in Table 1. The administrative completeness review
time-frame is suspended from the date the Department mails the notice of missing information to
the applicant until the date the Department receives the information.
3. If the applicant fails to submit the missing information before expiration of the completion
request period, the Department shall close the file, unless the applicant requests an extension in
writing from the Department before expiration of the Response to Completion Request period in
Table 1. The Department shall grant the applicant one extension for the number of days identified
as the Response to Completion Request period for the type of license. An applicant whose file
has been closed may obtain a license by submitting a new application.
C. Substantive review. The substantive review time-frame established in Table 1 begins after the
application is administratively complete.
1. The Department may schedule an inspection.
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2. If the Department makes a comprehensive written request for additional information, the
applicant shall submit the additional information identified by the request within the additional
information period provided in Table 1. The substantive review time-frame is suspended from the
date the Department mails the request until the information is received by the Department. If the
applicant fails to provide the information identified in the written request the Department shall
consider the application withdrawn unless the applicant requests in writing an extension from the
Department before expiration of the Response to Additional Information period in Table 1. The
Department shall grant the applicant one extension for the number of days identified in the
Response to Additional Information period for the type of license.
3. If the application is denied, the Department shall send the applicant written notice explaining
the reason for the denial with citations to supporting statutes or rules, the applicant's right to seek
a fair hearing, and the time period for appealing the denial.
D. Renewals. If an applicant for renewal of a salesperson's or broker's license submits a complete
renewal application:
1. Before the expiration date and there are no changes in the applicant's license or qualifications
pursuant to R4-28-301(A), the Department shall send the applicant notice that the license is
renewed;
2. After the expiration date, or if a substantive review is required because the applicant wishes to
make changes to or has answered in the affirmative any question on the license questionnaire,
the Department shall process the application as a modified or amended application.
R4-28-104. Development Inspection Fee
A fee shall be charged for a development site inspection pursuant to A.R.S. §§ 32-2182, 32-2194.02, 322195.02, 32-2197.05, and 32-2198.04, before or after issuance of a public report. Multiple inspections
and fees may be required based on development circumstances.

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Table 1. Time-frames (Calendar Days)
License

Authority

Administrative
Completeness
Review

Response
to
Completion
Request

Substantive
Review

Response
to
Additional
Information

Overall
TimeFrame

Broker or Salesperson

A.R.S. § 32-2122

(Individual)

A.A.C. R4-28-301

30

30

30

30

60

Individual Renewal

A.A.C. R4-28-303

30

30

30

30

60

Modified/Amended (Change of Name,
Address, or License Status)
Individual Reinstatement

A.A.C. R4-28-303

30

30

30

30

60

A.A.C. R4-28-303

30

30

30

30

60

Corp/LLC/Partnership/
PC/PLC/Desig. Broker Status

A.R.S. § 32-2125
A.A.C. R4-28-302

60

30

60

60

120

Branch Office

A.R.S. § 32-2127

60

30

60

60

120

Entity/DB status Renewal

A.A.C. R4-28-303

60

30

60

60

120

Modified/Amended (Change of Name,
Address, or License Status)

A.A.C. R4-28-303

60

30

30

60

120

Entity Reinstatement

A.A.C. R4-28-303

60

30

60

60

120

Temporary Broker

A.R.S. § 32-2133

60

30

60

60

120

Temp Cemetery Salesperson

A.R.S. § 32-2134

60

30

60

60

120

A.R.S. § 32-2134.01
A.A.C. R4-28-305
A.R.S. § 32-2135(A)
A.A.C. R4-28-404

60

30

60

60

120

10

15

20

15

30

Membership Camping
Convenience
School Approval

Cert.

of

Course Approval:

A.R.S. § 32-2135

New (Live Instruction)

A.A.C. R4-28-404

10

15

20

15

30

New (Distance Learning)

A.A.C. R4-28-402
A.A.C R4-28-404

30

30

90

30

120

Instructor Approval

A.R.S. § 32-2135
A.A.C. R4-28-404

10

15

20

15

30

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License

Authority

Administrative
Completeness
Review

Response
to
Completion
Request

Substantive
Review

Response
to
Additional
Information

Overall
TimeFrame

A.R.S. § 32-2198.10(D)
A.R.S. § 32-2198.14
A.A.C. R4-28-503(D)

15

5

0

0

15

A.R.S. § 32-2183.01(I)
A.A.C. R4-28-503(D)
A.A.C. R4-28-503(D)

15

5

0

0

15

A.R.S. § 32-2197.17(I)
A.A.C. R4-28-503(D)

15

5

0

0

15

(the offer of a premium)

A.R.S. § 32-2197.17(K)
A.A.C. R4-28-503(D)

15

5

0

0

15

Development Application

A.R.S. § 32-2183(A)
A.R.S. § 32-2195.03(A)
A.R.S. § 32-2197.06
A.R.S. § 32-2198.02
A.A.C. R4-28-B1203q

40

40

60

40

100

Amended Report

A.R.S. § 32-2184
A.R.S. § 32-2195.10
A.R.S. § 32-2197.03
A.R.S. § 32-2198.01(D)
A.A.C. R4-28-B1203

30

30

30

30

60

Certificate of Authority

A.R.S. § 32-2194.03(A)

40

40

60

40

100

Amended Certificate

A.R.S. § 32-2194.10
A.A.C. R4-28-B1204

30

30

30

30

60

Pre-license

A.R.S. § 32-2124
A.A.C. R4-28-401

15

60

30

0

45

Continuing Education

A.R.S. § 32-2130
A.R.S. R4-28-402

5

10

7

0

12

ADVERTISING
Membership Campground (only for
lottery or drawing)
Subdivision
(only for drawing or contest)
Time-Share
(only for drawing or contest)
Time Share

WAIVERS

EXEMPTIONS
Subdivision

A.R.S. § 2181.01
A.A.C. R4-28-B1202

40

40

40

40

80

Unsubdivided Lands

A.R.S. § 32-2195.01
A.A.C. R4-28-B1202

40

40

40

40

80

Time-Share

A.R.S. § 32-2197.13

40

40

40

40

80

Membership Camping

A.R.S. § 32-3198.03

40

40

40

40

80

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ARTICLE 3. LICENSURE
R4-28-301. General License Requirements; Non-resident License
A. An applicant for any Department-issued license or license renewal including, if an entity, any officer,
director, member, manager, partner, owner, trust beneficiary holding 10% or more beneficial interest,
stockholder owning 10% or more stock, or other person exercising control of the entity, shall submit the
following information to the Department:
1. A signed original licensure or renewal questionnaire, as applicable, disclosing any:
a. Conviction for a misdemeanor or felony, or deferral of a judgment or sentencing for a
misdemeanor or felony;
b. Order, judgment, or adverse decision entered against the applicant involving fraud or
dishonesty, or involving the conduct of any business or transaction in real estate,
cemetery property, time-share intervals, membership camping contracts, or
campgrounds;
c. Restriction, suspension, or revocation of a professional or occupational license, or
registration currently or previously held by the applicant in any state, district, or
possession of the United States or under authority of any federal or state agency; any
civil penalty imposed under the license, or any denial of a license; or
d. Order, judgment, or decree permanently or temporarily enjoining the applicant from
engaging in or continuing any conduct or practice in connection with the sale or purchase
of real estate or cemetery property, time-share intervals, membership camping contracts,
campgrounds, securities, or involving consumer fraud or violation of the racketeering
laws by the applicant, or payment from a recovery fund or fund of last resort due to the
applicant's action or inaction.
2. If the applicant discloses information under subsection (A)(1), the applicant shall provide all of
the following written documentation:
a. A signed written statement describing in detail the circumstances surrounding the
matter disclosed;
b. A certified copy of any police report and court record that pertains to each crime for
which the applicant has been convicted or for which sentencing or judgment has been
deferred. If the applicant is unable to provide documents for each crime, the applicant
shall provide written documentation from the court or agency having jurisdiction, stating
the reason the records are unavailable.
c. Three written and dated references from individuals, 18 years or older and not related
by blood or marriage to the applicant, who have known the applicant for at least one year
before the date of the Department's receipt of the application. Each reference shall be
dated no more than one year from the date the application is submitted to the
Department and include the writer's name, address, and telephone number;
d. A 10-year work history, stating each employer's name and address, supervisor's name
and telephone number, position held, and dates of employment, specifying any periods of
unemployment;
e. A certified copy of all documents pertaining to every reprimand, censure or sanction,
order assessing a civil penalty, or denying, suspending, restricting, or revoking any
professional or occupational license currently held or held by the applicant within the last
10 years;
f. A certified copy of any civil judgment awarded by a court of competent jurisdiction
against the applicant that included findings of fraud or dishonest dealings by the
applicant;
g. A certified copy of any document evidencing a payment of a judgment on behalf of the
applicant by any recovery fund administered by any state or professional or occupational
licensing board, or repayment by the applicant as a judgment debtor to any recovery fund
administered by any state or professional or occupational licensing board. If an Arizona
real estate or subdivision recovery fund matter, a written disclosure of the file number,
approximate date, and approximate amount of payment and current repayment status
satisfies this requirement.

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h. A certified copy of any temporary or permanent order of injunction entered against the
applicant;
i. Any other documentation that the applicant believes supports the applicant's
qualifications for licensure.
3. A full set of fingerprints as prescribed in A.R.S. § 32-2108.01;
4. The appropriate license application and fee; and
5. Social security number, if the applicant is an individual.
B. In addition to the information required in subsection (A), an applicant for a salesperson's or broker's
license shall provide information showing the person meet the qualifications listed in A.R.S. § 32-2124,
A.A.C. R4-28-401, and R4-28-403. If disclosing censure, sanction, disciplinary action, or other order
against any professional or occupational license currently or previously held by the applicant, the
applicant shall submit a certified license history from each state in which the applicant holds, or has held,
a professional or occupational license within the five years before the application.
C. The Department shall not issue a broker's license to any person who holds an active salesperson's
license in this state. An active-status salesperson applying for broker's license may simultaneously submit
a severance signed by the designated broker on behalf of the salesperson's employing broker under R428-303(E)(10) or may request to be administratively severed under R4-28-303(G).
D. The Department shall issue to a qualified person a license bearing the legal name of the licensee and
any additional nickname, corporate, or dba name that the Commissioner finds is not detrimental to the
public interest. A professional corporation or professional limited liability company licensed under A.R.S. §
32-2125(B) shall not adopt a dba name.
E. Every salesperson and broker holding a current license shall file with the Commissioner both the
address of the salesperson's or broker's principal place of business, if any, and a current residence
address.
F. Each salesperson, broker, school owner, director, administrator, and instructor shall, within 10 days of
each occurrence, notify the Commissioner in writing of any change in information provided under
subsection (A)(1)(a) through (d) and provide documentation listed in subsection (A)(2).
G. A licensee shall, within 14 calendar days or a later date determined by the Department, respond to a
request from the Commissioner or the Commissioner's representative for any documents, electronic files,
written statements, or other information required as a part of a complaint investigation, regardless of
whether the licensee is named in the complaint.
R4-28-302. Employing Broker's License; Non-resident Broker
A. A person applying for an employing broker's license shall provide the following information:
1. The name, business address, telephone number, fax number and e-mail address, if any, and
designated broker's name, license number and expiration date, and the signature of the
designated broker;
2. Whether the broker is an individual, a sole proprietorship, corporation, partnership, limited
liability company, professional corporation or professional limited liability company;
3. The mailing address, if different than the business address;
4. The d.b.a. name, if applicable;
5. The bank name and location of each of the broker's trust accounts, if any; and
6. The name and number of the trust account.
B. Partnership.
1. When the applicant is a partnership, the applicant shall name a broker to serve as designated
broker:
a. The designated broker shall be a partner of the general partner if the general partner is
a partnership.
b. The designated broker shall be a corporate officer of the corporate partner if the
general partner is a corporation.
c. The designated broker shall be a member of the member-managed limited liability
company or manager of the manager-managed limited liability company if the general
partner is a limited liability company.
d. A limited partner of a partnership shall not be designated broker for the partnership.
2. In addition to the information provided in subsection (A), an applicant for an employing broker's
license as a partnership shall, if applicable, provide:
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a. The name and address of each partner, and the name of any other person with a
beneficial or membership interest in the partnership;
b. An agreement signed by all partners, stating the name of the partner appointed to act
as the designated broker for the partnership;
c. A written statement signed by the designated broker stating that:
i. The partnership has applied for a broker's license in Arizona;
ii. Each partner has read the complete application on the named partnership as
submitted to the Department;
iii. All the information contained in the application is true;
iv. Each general partner is qualified to do business in Arizona; and
v. The name of the partnership complies with A.R.S. § 29-245 and subsections
(H) and (I), and is not likely to be misleading or confusing;
d. A copy of the partnership agreement and any amendments;
e. A copy of the application for partnership registration stamped "Received and Filed" by
the Arizona Secretary of State; and
f. Any other information required by the Department to verify the applicant's qualifications.
C. Corporation. In addition to the information provided in subsection (A), an applicant for an employing
broker's license for a corporation shall provide:
1. The name and address of each officer and director, and the name and address of each
shareholder controlling or holding more than 10% of the issued and outstanding common shares,
or 10% of any other proprietary, beneficial, or membership interest in the corporation;
2. A copy of the Articles of Incorporation and any amendments stamped "Received and Filed" by
the Arizona Corporation Commission. If more than one year has elapsed between the date the
Articles were stamped "Filed" by the Arizona Corporation Commission and the application for the
corporate license, a Certificate of Good Standing from the Arizona Corporation Commission is
required;
3. A corporate resolution stating that the designated broker was elected or appointed as a
corporate officer, naming the office held, and stating that the individual was appointed to act as
designated broker for the corporation;
4. A written statement signed by the designated broker stating that:
a. The corporation has applied for a broker's license in Arizona;
b. Each officer and director has read the complete application on the named corporation
as submitted to the Department;
c. All the information contained in the application is true;
d. The name of the corporation complies with A.R.S. § 10-401 and 4 A.A.C. 28, Article
10, and is not likely to be misleading or confusing; and
e. Each corporation is qualified to do business in Arizona; and
5. Any other information required by the Department to verify the applicant's qualifications.
D. Limited liability company. In addition to the information provided in subsection (A), an applicant for an
employing broker's license for a limited liability company shall provide:
1. The name and address of each member and manager, and the name and address of any
person controlling or holding more than 10% of the membership interest in the limited liability
company;
2. A copy of the Articles of Organization and any amendments stamped "Received and Filed" by
the Arizona Corporation Commission. If more than one year has elapsed between the date the
Articles were stamped "Filed" by the Arizona Corporation Commission and the application for the
limited liability company license, a Certificate of Good Standing from the Arizona Corporation
Commission is required;
3. A company resolution signed by all members stating whether management of the limited
liability company is established as manager-controlled or member-controlled and the name of the
member or manager appointed to act as the designated broker;
4. A written statement signed by the designated broker stating that:
a. The limited liability company has applied for a broker's license in Arizona;
b. Each member and manager has read the complete application on the limited liability
company as submitted to the Department;
c. All of the information contained in the application is true;
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d. The name of the limited liability company complies with A.R.S. § 29-602 and 4 A.A.C.
28, Article 10, and is not likely to be misleading or confusing; and
e. The limited liability company is qualified to do business in Arizona.
5. A copy of the operating agreement and any amendments; and
6. Any other information required by the Department to verify the applicant's qualifications.
E. Foreign entity. In addition to the requirements in this Section, the Department may require any of the
following information from an entity applying for a broker's license if a partner, member, officer, or director
of the entity is domiciled in another state:
1. The agreement and plan of merger;
2. The Certificate of Good Standing;
3. The Certificate of Merger on file in the state in which the applicant is domiciled;
4. The Certificate of Merger on file with the Arizona Corporation Commission;
5. A filed and stamped Articles of Merger;
6. A filed and stamped application for registration of the foreign limited liability company, foreign
corporation, or partnership;
7. Any other information required by the Department to verify the applicant's qualifications.
F. Self-employed broker. In addition to the information provided in subsection (A), any person applying as
a self-employed broker shall provide a sworn statement attesting that the applicant is the sole proprietor
of the business.
G. If any information prescribed in subsections (A) through (F) changes, the designated broker shall,
within 10 days after the change, file a supplemental statement in writing with the Department listing the
change and include the appropriate fee, if any.
H. The Department shall not license an employing broker or authorize an employing broker to do
business under a dba name similar to that of any employing broker already licensed if the name would
cause uncertainty or confusion to the public. If there is a conflict of names between two employing
brokers, the Commissioner shall require the employing broker seeking licensure to supplement or
otherwise modify the broker's name.
I. The Department shall not license an employing broker under more than one dba name and a person
shall not conduct or promote real estate business under any name other than the name under which the
person is licensed.
J. A broker shall not employ a salesperson or associate broker and allow the salesperson or associate
broker to establish and carry on a brokerage business if the broker's only interest is the receipt of a fee for
the use of the license and the broker does not exercise supervision over the salesperson or associate
broker.
K. Change of designated broker.
1. To resign as an employing broker's designated broker a broker shall submit to the Department
a copy of the broker's letter of resignation and shall return the licenses issued to the designated
broker and the employing broker to the Department.
2. A licensed entity may remove its designated broker by submitting to the Department a copy of
the partnership agreement, corporate or company resolution removing the broker and returning to
the Department the licenses issued to the employing broker and designated broker.
3. The employing broker whose designated broker has resigned or been removed shall cease
conducting business until the employing broker has complied with subsection (K)(4).
4. An employing broker whose designated broker has resigned or been removed may continue
business without interruption if the incoming designated broker on the same day as, or the next
business day following, the departure or removal of the outgoing designated broker:
a. Completes, signs, and submits the Change Form as prescribed in R4-28-303; and
b. If the entity is a corporation or limited liability company, submits a resolution appointing
the new broker to act on its behalf; or
c. If the entity is a partnership, submits an amendment to the partnership agreement
naming the new broker to act on its behalf.
L. Non-resident employing broker.
1. An employing broker that holds a non-resident license and maintains a principal office outside
this state shall:
a. Maintain a trust account or licensed escrow account situated in Arizona for monies
received from Arizona transactions;
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b. Maintain, in Arizona, copies of all documents pertaining to any Arizona transactions
handled by the broker;
c. Provide a written statement to the Department identifying the name, address, and
telephone number of the person residing in Arizona, such as a statutory agent or
attorney, who has possession of the records; and
d. Identify the physical location of the records.
2. An employing broker that holds a non-resident license and employs a licensed salesperson or
broker within the state shall:
a. Establish an office in Arizona and appoint a branch manager; and
b. Provide a statement describing how the licensed employee shall be supervised.
3. An employing broker who holds a non-resident license shall notify the Department within 10
days of any change to any information required under this Section.
R4-28-303. License Renewal; Reinstatement; Changes of Personal Information, License, or
License Status; Professional Corporation or Professional Limited Liability Company Licensure;
Administrative Severance
A. Renewal.
1. If a salesperson or broker makes a timely and sufficient application for license renewal or a
new license with reference to any activity of a continuing nature, the existing license does not
expire until the application has been finally determined by the Department, and, in case the
application is denied or the terms of the new license limited, until the last day for seeking review
of the Commissioner's order or a later date fixed by order of the reviewing court.
2. Any salesperson or broker applying for a license renewal shall submit the following information
on the Application for License Renewal form:
a. Any change or correction to the applicant's licensing information;
b. Whether the renewal application is late;
c. If the renewal is for an active license and is filed in paper format, the Department shall
require the application to include the date and signature of the designated broker,
authorized branch office manager, or authorized designee under A.R.S. § 32-2127(D). If
signed by a branch manager or designee, the branch manager or designee shall attach a
copy of the authorization or designation;
d. The signature of the applicant, attesting to the truthfulness of the application
information;
e. A completed certification questionnaire, providing details and supporting documents for
any affirmative response not previously disclosed in writing to the Department concerning
judgments, orders, professional licenses, or convictions, as required under R4-28-301(A).
f. To renew as designated broker for an employing broker, the designated broker shall
complete and submit a signed Broker Supervision & Control Audit Declaration for the sole
proprietorship or entity on whose behalf the broker acts as designated broker. The
completed declaration shall:
i. Be dated and filed before or with the broker's renewal application, and
submitted to the Department no earlier than 90 days before the broker's license
expiration date;
ii. Be in the form prescribed by the Department;
iii. State the broker's compliance or non-compliance with, or the non-applicability
of, specified statutes and rules; and
iv. Identify all of the broker's property management and trust accounts.
B. Late renewal. In addition to the information required in subsection (A), any person applying for renewal
after the date of license expiration shall specify whether the person conducted unlawful license activities
as described in R4-28-306.
C. Reinstatement.
1. Any salesperson or broker applying for license reinstatement under A.R.S. § 32-2131 shall, in
addition to the requirements in R4-28-301(A), submit the following information on the Application
For Reinstatement form:
a. The type of license and status requested;
b. The applicant's legal name, business address, and telephone number;
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c. Whether the license was suspended, canceled, terminated, or revoked, and the date of
and reason for the action;
d. The license number of the applicant;
e. The mailing address, if different than the business address;
f. The name, address, and telephone number of the employing broker, if applicable;
g. The employer's trade or d.b.a. name, if any;
h. The date of the application; and
i. The signature of the applicant attesting to the above information and that the applicant
is aware of the provisions in A.R.S. §§ 32-2131, 32-2153, and 32-2160.01.
2. If the license was active at the time of suspension, cancellation, revocation, or termination, the
applicant shall provide the information required under R4-28-306.
D. A salesperson or broker shall notify the Department in writing within 10 days of any change in the
individual's personal information or qualifications. The salesperson or broker shall include in the notice the
individual's name, signature, license number, and:
1. If disclosing information required under R4-28-301, such as a criminal conviction, adverse
judgment, denial or restriction of or disciplinary action against a professional or occupational
license, or recovery fund payment on the person's behalf, a written statement providing detailed
information and, upon request by the Department, the supporting documentation identified in R428-301(A)(2);
2. If requesting a change of personal name, written notice stating the prior name and new name,
supporting documentation for the change, and applicable fee;
3. If changing residence address or residential mailing address, written notice stating the prior
address, new address and the date of the change;
4. If changing residence telephone number or providing an additional telephone number or e-mail
address, written notice of the prior and current number or e-mail address; or
5. If becoming licensed as a professional corporation or professional limited liability company, or
changing licensure as a professional corporation or professional limited liability company, the
information required under subsection (F).
E. A designated broker shall notify the Department in writing within 10 days of any change in the
employing broker's qualifications under R4-28-301, and shall provide notice of any proposed change in
the employing broker's business information under this Section. An employing broker shall not conduct
business under information described in subsections (E)(2), (3), (7), (9), (12), or (13) until the change is
approved by the Department. The designated broker shall include in the notice the designated broker's
name and signature, the employing broker's legal name, and:
1. If disclosing information required under R4-28-301 such as an adverse judgment, denial, or
restriction of or disciplinary action against a professional or occupational license, or recovery fund
payment on the person's own behalf or on behalf of any officer, director, member, manager,
partner, owner, trust beneficiary holding 10 percent or more beneficial interest, stockholder
owning 10 percent or more stock, or other person exercising control of the employing broker, file
with the Department a written statement within 10 days of the occurrence, providing detailed
information and, upon request by the Department, the supporting documentation identified in R428-301(A)(2);
2. If changing the employing broker's legal name, written notice stating the current name and
proposed name, supporting documentation, and applicable fee;
3. If changing the employing broker's dba name, written notice stating the current dba name, if
any, the proposed dba name, and applicable fee;
4. If changing the employing broker's physical address, changing or adding a business mailing
address, or changing the address of any branch office, written notice within 10 days of the
change stating the prior address and new address, return all current licenses issued to the former
address, and pay the applicable fee;
5. If changing business telephone number, written notice within 10 days of the change, providing
the prior and current number. The broker may provide additional telephone numbers or e-mail
addresses;
6. If changing the structure or membership of the employing broker as provided in A.R.S. § 322125 (G), written notice within 10 days of the change including supporting documentation
identified in R4-28-302;
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7. If changing branch office managers at an established branch office of the employing broker, or
changing the authority delegated to the branch office manager, the application form, applicable
fee, and letter of authority that identifies the person appointed and specifies the duties delegated
as provided by R4-28-304;
8. If closing a branch office, a written statement informing the Department within 10 days of the
closure, accompanied by the branch office license and Department form severing the
employment of or transferring to another branch office each employee at the branch;
9. If hiring a salesperson or broker, or transferring a salesperson or broker employed by the
employing broker to another office of the employing broker, a change form that includes the
name, license number, signature of the employee, and the branch office address where the
employee will work, and applicable fee;
10. If severing a licensee employed by the employing broker, written notice and return of the
employee's license within 10 days of the severance;
11. If opening or closing a broker's trust account, written notice within 10 days of the opening or
closing that provides the name of the account, the account number, and the name and address of
the bank where the account is located. If relocating or changing the name of a trust account, the
designated broker shall include the information for the previous and new accounts;
12. If appointing a temporary broker, submit the information specified in R4-28-305 and in
accordance with provisions of A.R.S. §§ 32-2127 or 32-2133, as applicable; or
13. If an employing broker is changing designated brokers, the information and documentation
provided in R4-28-302(K).
F. In addition to the applicant's name, signature, license number, the name and address of the employing
broker's office where the employee will work, and the change fee, a salesperson or broker shall submit
the following information to be licensed as a professional corporation or professional limited liability
company, to add or remove members of a licensed professional corporation or professional limited liability
company, or to change the name of a licensed professional corporation or professional limited liability
company:
1. Professional corporation.
a. The name of the professional corporation that includes the full or last name of each
officer, director, and shareholder of the professional corporation as it appears in the
Articles of Incorporation;
b. The name and business address of each officer, director, and shareholder in the
corporation and a written statement that each holds a current and active real estate
license;
c. A copy of the Articles of Incorporation, as amended, stamped "Received and Filed" by
the Arizona Corporation Commission;
i. The Articles of Incorporation shall state that the corporation's sole purpose is to
provide professional real estate, cemetery, or membership camping services, or
real estate, cemetery, and membership camping services.
ii. If more than one year has elapsed between the date the Articles of
Incorporation were stamped "Filed" by the Arizona Corporation Commission and
the date of the application for a license as a professional corporation, the
Department shall require the salesperson or associate broker to submit a
Certificate of Good Standing from the Arizona Corporation Commission; and
d. Evidence that membership in the professional corporation is limited to the designated
broker and does not include any other person if the applicant for licensure as a
professional corporation is licensed as a designated broker;
2. Professional limited liability company.
a. The name of the professional limited liability company which includes the full or last
name of each member of the professional limited liability company as it appears in the
Articles of Organization;
b. The name and address of each member and manager in the limited liability company
and a written statement that each holds a current and active real estate license;
c. A copy of the Articles of Organization, as amended, stamped "Received and Filed" by
the Arizona Corporation Commission:

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i. The Articles of Organization shall state that the limited liability company's sole
purpose is to provide professional real estate, cemetery, or membership camping
services, or real estate, cemetery, and membership camping services.
ii. If more than one year has elapsed between the date the Articles of
Organization were stamped "Filed" by the Arizona Corporation Commission and
the date of the application for a license as a professional limited liability
company, the Department shall require the salesperson or associate broker to
submit a certificate of Good Standing from the Arizona Corporation Commission.
d. A copy of the operating agreement, as amended; and
e. Evidence that membership in the professional limited liability company is limited to the
designated broker and does not include any other person if the applicant for licensure as
a professional limited liability company is licensed as a designated broker.
3. To return a license from professional corporation or professional limited liability company status
to individual status:
a. The name, license number, and dated signature of the salesperson or broker;
b. A written statement that the salesperson or broker no longer wishes to be licensed as
a professional corporation or professional limited liability company; and
c. The change fee.
G. Administrative severance.
1. A salesperson or broker may request that the Department sever the salesperson's or broker's
license from the employing broker. The salesperson or broker shall provide the following
information on a form or in the manner prescribed by the Department:
a. The name, license number, and dated signature of the salesperson or broker seeking
the severance; and
b. The name of the employing broker from whom the license is being severed.
2. Upon receipt of the written request for severance as provided in subsection (G)(1)(a), the
Department shall administratively sever the license and provide written notice to the employing
broker, who shall return the severed person's license to the Department under subsection
(E)(10).
R4-28-304. Branch Office; Branch Office Manager
A. To obtain a branch office license, the designated broker shall submit to the Department before
operating the branch office the following information for each branch office of the employing broker on the
Application for Branch Office form:
1. The name, date, and signature of the designated broker;
2. The license number and license expiration date of the employing broker;
3. The name, address, telephone, and license number of the main office;
4. The type of employing broker's license;
5. The employing broker's dba name, if applicable;
6. The address, telephone number, and fax number, if any, of the branch office; and
7. The name and license status of the salesperson or broker who is the branch office manager
and the authority granted to the branch office manager, including any designation of authority
under subsection (B).
B. Branch office manager. A designated broker may authorize in writing an associate broker or
salesperson to act as a branch office manager to perform any of the following duties of the designated
broker at the branch office. This designation does not relieve the designated broker from any
responsibilities. Upon change of the branch manager, the designated broker shall submit a new
authorization to the Department within 10 days of the change and shall retain a copy in the broker's main
office for five years.
1. If the branch manager is an associate broker, the associate broker may, when dealing with
branch office transactions:
a. Review and initial contracts,
b. Supervise the activity of salespersons and associate brokers,
c. Hire or sever a salesperson or associate broker,
d. Sign compensation checks,
e. Be a signer on the branch office trust account and property management trust account,
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f. Write checks from the broker's trust accounts, and
g. Be responsible for the handling of all trust account funds administered by the branch
manager.
2. If the branch manager is a salesperson, the salesperson may, when dealing with branch office
transactions:
a. Perform office management tasks that are not statutory duties of the employing broker,
and
b. Be a signer on the broker's trust account and property management trust account.
C. Temporary office. An additional license is not required for a temporary office established for the
original on-site sale of properties within the immediate area of a subdivision or unsubdivided land.
1. The broker named in the application for public report shall supervise operation of the temporary
office to sell or lease the subdivided or unsubdivided land.
2. The broker shall display the subdivision or unsubdivided land name and the licensed name of
the employing broker marketing the development in a prominent manner at the entrance to the
temporary office.
R4-28-305. Temporary License, Certificate of Convenience
A. Any individual applying for a temporary cemetery salesperson's license, a temporary broker's license,
or a membership camping salesperson's certificate of convenience shall submit the following information
and applicable fee to the Department:
1. The type of license requested;
2. The name, address, telephone number, and date of birth of the applicant;
3. The mailing address if different from the address in subsection (A)(2);
4. The name, business address, telephone number, fax number, if any, and license number of the
employing broker; and
5. The branch office number, address, telephone number, and fax number, if any, where
employed, if different than the employing broker in subsection (A)(4).
B. The designated broker shall submit an affidavit under A.R.S. § 32-2134 or 32-2134.01 for:
1. An applicant for temporary cemetery license stating that the applicant has been trained in
cemetery and contract law; or
2. An applicant for a membership camping certificate of convenience stating that the applicant will
be trained in membership camping and contract laws.
C. In addition to the information required in subsection (A), an applicant for a temporary broker's license
pursuant to A.R.S. § 32-2133 shall submit the following information to the Department:
1. A copy of the death certificate or notice, if applicable, or a letter advising the Department of the
broker's illness or disability; and
2. A letter from the surviving spouse, an attorney representing the broker or the broker's family,
personal representative, or other responsible party, appointing an individual to serve as a
temporary broker for 90 days.
R4-28-306. Unlawful License Activity
A. Unlawful license activity is:
1. The performance of acts requiring a license under A.R.S. § 32-2122 by a person who does not
hold a current and active license;
2. The performance of acts requiring a license by a person on behalf of a broker other than the
person's employing broker; or
3. A broker's employment of a person as a salesperson or broker if the person does not hold a
current and active license issued to the person under that employing broker.
B. A person who conducts unlawful license activity shall submit to the Department, as soon as the person
becomes aware that the activity has occurred, the following:
1. A written explanation of why the unlawful license activity occurred;
2. A signed statement from the person that the person will not conduct activities requiring
licensure under A.R.S. § 32-2122 unless the person holds a current and active license to perform
those acts;
3. A signed statement from the employing broker's designated broker, identifying all unlawful
activity by the person on behalf of the employing broker;
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4. Upon request by the Department:
a. A copy of all listing and employment agreements, offers or contract to buy, sell, lease,
exchange, transfer, or manage real estate, cemetery property, or membership camping
contracts prepared, negotiated or executed by the person while the person was not
properly licensed under the employing broker;
b. Documentation listing all compensation received or to be received by the person based
on transactions that occurred while the person was not properly licensed;
c. Documentation listing all compensation received or to be received by the person's
employing broker and designated broker, if any, resulting from transactions that occurred
while the person was not properly licensed if not provided in response to subsection
(B)(4)(b); and
d. A signed statement from the person stating that the information provided under
subsection (B)(4) is true and complete and that the copies provided are true copies of all
contracts, agreements, statements, and leases and no relevant documents are omitted.
C. A person who has no prior history of engaging in unlawful license activity under this Section, who
conducted unlawful license activity for not more than 30 days and against whom there are no pending
complaints may apply to renew the person's license or for license change to active status. The
Department shall not delay processing the application based on the unlawful licensed activity. The
Department shall issue an Advisory Letter of Concern to the person.
D. The Commissioner may take disciplinary action under A.R.S. § 32-2153 against a person who
engages in unlawful license activity under this Section for longer than 30 days, has previously conducted
unlawful license activity, or is the subject of a pending complaint.

ARTICLE 4. EDUCATION
R4-28-401. Prelicensure Education Requirements; Waiver
A. Any individual applying for a real estate license shall either:
1. Complete the required 90-hour prelicensure education as prescribed in A.R.S. § 32-2124; or
2. Except for the 27-hour Arizona-specific course, apply for and be granted a waiver of the
prelicensure courses.
B. If the waiver request is based on prior education, the applicant shall submit a letter to the
Commissioner that includes or demonstrates:
1. The name, mailing, and business address, daytime telephone number, and signature of the
applicant;
2. The type of license sought;
3. The name and address of the school;
4. The course description or curriculum, including credit hours; and
5. Completion of one or more real estate courses. Acceptable evidence includes;
a. A signed letter from a school representative or official transcript from a college or
university, which indicates:
i. The starting and ending dates of the course;
ii. The number of semesters, quarters, and credit hours awarded per course; and
iii. Whether the course examination was passed.
b. Evidence of course completion provided as part of a certified license history from a
state in which the applicant is currently or was previously licensed.
C. If the waiver request is based on experience, or education and experience, the applicant shall submit a
letter to the Commissioner that includes:
1. A detailed resume covering the previous 10 years, indicating duties performed and the name
and telephone number for each employer; and
2. An original certified license history, including disciplinary action if any, from the real estate
regulatory agency in each state in which the applicant is currently licensed and from any other
state in which the applicant was licensed during the preceding 10 years; and
3. One or more of the following:
a. Completion of one or more real estate courses. Acceptable evidence includes a signed
letter from a school representative, or official transcript from a college or university, which
identifies:
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i. The starting and ending dates of the course;
ii. The number of semesters, or quarters, and credit hours awarded per course;
iii. Whether the course examination was satisfactorily passed.
b. Evidence of more than five years' experience in a real estate related field; or
c. Evidence of course completion provided as part of a certified license history from a
state in which the applicant is currently or was previously licensed.
D. The Department shall provide a copy of the prelicensure course content to any person requesting it.
E. A person shall not receive credit for more than 10 hours of prelicensure education classes per day.
R4-28-402. Continuing Education Requirements; Waiver; Distance Learning
A. Continuing education requirements.
1. To be eligible for license renewal, a real estate salesperson or broker shall complete continuing
education courses approved by the Department under R4-28-404, presented by a real estate
school approved under R4-28-404, and taken since the salesperson's or broker's original
licensure or effective date of the preceding license, whichever is later.
2. A real estate salesperson or associate broker applying for renewal shall submit proof of
satisfactory completion of 24 credit hours of continuing education courses in the categories
specified in subsection (A)(5). The renewal applicant shall complete a minimum of three hours in
each of the mandatory categories under subsections (A)(5)(a) through (A)(5)(f). The renewal
applicant shall take additional courses in the mandatory categories, or shall take courses in the
business brokerage or general real estate categories described in subsection (A)(5)(g) and
(A)(5)(h) to fulfill the required 24 credit hours.
3. A real estate designated broker applying for renewal shall submit proof of satisfactory
completion of 24 credit hours of continuing education courses. The renewal applicant shall
complete a minimum of three hours in each of the mandatory categories under subsections
(A)(5)(a) through (A)(5)(f) and shall complete a Broker Management Clinic under A.R.S. 32-2136
approved in the Commissioner's Standards category under subsection (A)(5)(c). The renewal
applicant shall take additional courses in the mandatory categories, or shall take courses in the
business brokerage or general real estate categories described in subsection (A)(5)(g) and
(A)(5)(h) to fulfill the required 24 credit hours.
4. A salesperson renewing for the first time may include credit for attendance at the Contract
Writing class taken under A.R.S. § 32-2124(L) if taken within one year before the date of the
salesperson's original licensure. A broker renewing for the first time may include credit for
attendance at the Broker Management Clinic under A.R.S. § 32-2136 taken before the broker's
original licensure date.
5. The categories for real estate continuing education courses are:
a. Agency law. The majority of class material concerns agency relationships and
disclosure.
b. Contract law. The majority of class material concerns the contract formation and
implementation, or the results of contract use, including:
i. Various contract forms and clauses, fundamentals, updates, options, offers,
counter offers, first right of refusal, and exchanges;
ii. Contract writing;
iii. Required disclosures, problem-solving, and law and rule requirements;
iv. Recent court decisions and case law studies;
v. Breach of contract issues;
vi. Legal, ethical and agency considerations, procedures, and disclosures;
vii. Accommodating current financing procedures, requirements, and options.
c. Commissioner's standards. The majority of class material relates to license laws,
including:
i. Article 26 of the Arizona Constitution;
ii. A.R.S. Title 32, Chapter 20, and A.A.C. Title 4, Chapter 28, which includes
trust accounts, recordkeeping, license requirements, exemptions to licensure,
commission payments, recovery fund provisions, development requirements,
processes for public reports for and sale of subdivided and unsubdivided land,

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membership campgrounds and time-shares, cemetery regulations, and grounds
for disciplinary action and hearings.
iii. A.R.S. Title 44, Chapter 10, Article 3.1, Trade Names and Business Practices.
d. Real estate legal issues. The majority of class material concerns existing real estate
law, including:
i. Sources of real estate law (constitutions, statutes, zoning, common), and the
legal system;
ii. Land and its elements (air, mineral rights, real and personal property);
iii. Land, title, and interests in land, homestead, encumbrances, and the Landlord
and Tenant Act;
iv. Easements, fixtures, land descriptions, ownership, deeds, and building
restrictions;
v. Escrow procedures, financing documents, and lending laws and regulations,
including Regulation Z;
vi. Wills and estates, taxes, bankruptcy law, securities laws, title insurance, and
appraisal law;
vii. Case law studies, real estate fraud, disclosure law, interstate and
international real estate;
viii. Commission issues and forms of business ownership;
ix. Homeowners Association regulations;
x. Real Estate Settlement Procedures Act (RESPA); and
xi. Environmental issues.
e. Fair housing. The majority of class material concerns equal opportunities in housing,
including:
i. Americans with Disabilities Act, ADA architectural designs (construction and
development), and pertinent court cases;
ii. Arizona and federal fair housing laws, including advertising, marketing,
information, and enforcement;
iii. Housing developments, deed restrictions, affordable housing, elder housing,
zoning, local ordinances, and disclosures;
iv. Commercial and residential concerns; and
v. Administrative procedures and business practices.
f. Disclosure. The majority of class material concerns the following:
i. Licensee's disclosure obligations to client and others;
ii. Seller's and buyer's disclosure obligations to each other;
iii. Common material facts warranting disclosure, and liability for failure to
disclose;
iv. Avoiding inadvertent non-disclosures;
v. Transaction documents that should be reviewed;
vi. Common "red flags" in a real estate transaction;
vii. Homeowner associations and buyers' obligations to homeowner associations;
and
viii. Advising buyers and sellers of common "red flags."
g. Business brokerage. The majority of class material concerns business brokerage
including:
i. Business brokerage basics including introducing licensees to business
brokerage, associated terminology, marketing, prospecting, listing, pricing,
closing practices, the use of contracts related to and unique to business
brokerage, and the application of business brokerage contracts;
ii. Business valuations and appraisals, and establishing an in-depth review of
proper business valuation techniques for small, medium, and large businesses;
iii. Tax structure and considerations, tax law, and policy including subjects such
as financing tools available, options available, and tax implications;
iv. Accounting for business brokers;
v. Agency in business brokerages, the use of contracts related to and unique to
business brokerage, and the application of business brokerage contracts; and
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vi. Disclosure issues in business brokerage, including common "red flags" in a
business opportunity transaction, and advising buyers and sellers of common
"red flags."
h. General real estate. The majority of class material concerns real estate, but does not
fall within any of the categories listed in subsections (A)(5)(a) through (A)(5)(g), including:
i. Appraisal methodology;
ii. General finance, use of financial calculators, mathematics, and managing cash
flow;
iii. History of development in metropolitan areas; and
iv. Introduction to property management.
6. The Department may require an individual applying for renewal to obtain credit hours based
upon significant current issues in the real estate community. The Department shall notify
licensees of a new requirement by written notice published in printed or electronic format.
7. The Department may grant continuing education credit for a course that does not have a
certificate of approval under R4-28-404 if the applicant demonstrates to the satisfaction of the
Commissioner that the course meets the requirements prescribed in R4-28-404 and the course
content requirements of this Section.
8. An applicant may substitute subject matter hours within a 90-hour broker's prelicensure course
that meet the criteria for credit under subsections (A)(5)(a) through (A)(5)(h), if taken since the
last license renewal, for the continuing education credit required in subsection (A)(2) or (3).
9. If any change in the continuing education course requirements occurs during a renewal
applicant's license period and the applicant has fully complied with the continuing education
requirement in effect before the change occurs, the Department shall consider the renewal
applicant to be in compliance with the continuing education requirements for the license period.
B. Continuing education waiver. Under A.R.S. § 32-2130, the Commissioner may waive all or a portion of
the continuing education requirement or grant additional time to complete a continuing education
requirement when a salesperson or broker submits a written request to the Commissioner and shows
good cause for the waiver or additional time.
1. Good cause may include:
a. A person employed by the state or political subdivision establishes to the satisfaction
of the Commissioner that the person's employment during the prior license period
involved real estate-related matters;
b. Any officer or employee of the state whose license is on an inactive status due to a
possible conflict of interest or other employment requirement;
c. The person demonstrates successful completion of a course on topics specifically
related to the person's field of real estate practice;
d. An approved real estate instructor requests a waiver for a course the instructor has
taught;
e. The salesperson or broker demonstrates other extraordinary circumstances.
2. A salesperson or broker is granted additional time by the Commissioner to complete the
continuing education requirement for license renewal shall complete the continuing education
hours by the deadline or be subject to disciplinary action.
C. The Department shall not grant a person credit for more than nine hours of continuing education per
day.
D. Distance learning.
1. Only a school holding a Certificate of Approval shall offer a distance learning course. The
school shall obtain course approval from the Department before advertising the course as
approved by the Department for credit hours and before issuing Department credit hours for the
course to students.
2. The Department shall not approve a distance learning course unless it contains:
a. Individual modules of instruction for delivery on a computer or other interactive
program;
b. At least one learning objective for each module of instruction. The learning objective
shall ensure that if all the objectives are met, the entire content of the course is
understood;
c. A structured learning method to enable the student to attain each learning objective;
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d. A diagnostic assessment of the student's performance during each module of
instruction;
i. The assessment shall measure what the student learned throughout the
module of instruction, and
ii. Assess the comprehension of each concept covered in the module;
e. Remediation.
i. Repetition of a module if a student is deficient in a diagnostic assessment; and
ii. Continuous repetition of the module until the student understands the content
material.
3. An approved instructor shall teach and an approved instructor or the school director shall grade
distance learning courses. The instructor or school director shall:
a. Provide the student with assistance, if required;
b. Obtain a signed certification statement from the student indicating that the student has
completed each assignment of instruction; and
c. Certify the student as completing a distance learning course only if the student:
i. Completes all required instructional modules,
ii. Attends any required hours of live instruction or testing, or both, for a given
course; and
iii. Passes a final examination.
4. As part of its application for approval of a distance learning course, a school shall file a
plan with the Department describing how the school will deal with hardware and software
failure.
R4-28-403. License Examinations
A. The Department shall hold, or contract for, at least one state licensing examination each week.
B. A state license examination shall not be returned to the applicant. The applicant shall be notified in
person of the results of the examination by the words "passed" or "did not pass." The results notification
for an applicant who did not pass the examination shall also show the score for the examination and the
relative score for each content area.
C. Qualifying to take or passing a license examination does not constitute a waiver of the Commissioner's
right to deny issuance of a license if grounds exist pursuant to A.R.S. § 32-2153 or any other applicable
statute.
R4-28-404. Real Estate School Requirements, Course and Instructor Approval
A. Certificate of School Approval. Except for a community college or university accredited by the Council
on Post Secondary Accreditation or the U.S. Department of Education offering courses in real estate, any
school offering a course of study for original or renewal licensure of a real estate applicant shall apply for
and possess a Certificate of School Approval from the Department. The school's authorized
representative shall provide the following information on or with the Certificate of School Approval form:
1. The name, address, telephone number, and fax number, if any, of the school;
2. The name of the owner and d.b.a. name, if any;
3. Whether the owner is a sole proprietorship, partnership, trust, limited liability company, or
corporation;
4. The name, address, telephone number, and percentage ownership of each person, entity, or
beneficiary holding or controlling 10% or more financial interest in the school;
5. The name of each individual authorized to act on behalf of the school and sign continuing
education certificates or prelicensure verifications, or both;
6. The name, business address, and telephone number of all current and prospective
administrators, directors, and instructors;
7. In addition to the information required in R4-28-301(A), each school owner, administrator,
director, and instructor shall provide a statement of the individual's:
a. Education,
b. Teaching experience, and
c. Employment history.
8. If the owner is a partnership, a copy of the partnership agreement naming the partner
authorized to act on its behalf;
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9. If the owner is a corporation or limited liability company, a copy of:
a. A corporate or company resolution or operating agreement naming the officer,
member, or manager authorized to execute the Certificate of Approval form;
b. A current Certificate of Good Standing from the Arizona Corporation Commission;
c. The latest annual report on file with the Arizona Corporation Commission;
d. The Articles of Incorporation or Organization, as amended.
10. The location of school registration and licensing certification records.
B. Certificate of Course Approval. Any school offering a course of study for original or renewal licensure
of a real estate applicant shall apply for and possess a Certificate of Course Approval for each course
offered by the school. The school's authorized representative shall submit the following information:
1. The school name, address, telephone number, and fax number, if any;
2. The authorized representative's name, title, and signature;
3. The title of the course;
4. A detailed outline of course material content that clearly lists the subject matter to be covered;
5. The date, time, and location of the anticipated presentation, if known;
6. The number of credit hours requested. The time allocated by a school for examination shall not
be included in calculating credit hours if the examination is used for overall evaluation.
7. The category of approval requested;
8. A definition of segments if the course is to be offered in part and in its entirety;
9. If video or audio tapes will be used as instructional aids, the percentage of the class they will
comprise;
10. The name of every instructor who will teach the course; and
11. The date of the application.
C. Instructor approval. Any person wishing to teach an approved real estate course shall apply for an
instructors approval, and shall have at least one of the following in the proposed subject area:
1. A bachelor's or master's degree in an area traditionally associated with real estate, such as
business, law, economics, marketing, and finance;
2. An award of a generally-recognized professional real estate designation, such as Certified
Commercial Investment Member, Graduate Realtor Institute, Certified Residential Specialist,
Independent Fee Appraiser, or Member of the Appraisal Institute, and two years of postsecondary
education from an accredited institution;
3. Experience in real estate, and a bachelor's degree in education with a valid certificate issued
within 15 years of the date of application for instructor approval;
4. A real estate salesperson's or broker's license, and is an employee or former employee of a
regulatory agency;
5. A Distinguished Real Estate Instructor designation, with credentials in the specific subject;
6. At least three years real estate or specific subject experience; or
7. Other education or experience determined by the Commissioner to qualify the applicant as an
instructor.
D. The school shall maintain a record for five years of each student attending the school. The record shall
include:
1. The name of each student;
2. The dates of attendance;
3. The title of each course taken;
4. The course number, category, and credit hours awarded;
5. The final grade or score in each prelicensure course; and
6. The original signature roster for each course or course segment taught.
E. The prospective student shall sign an agreement or application to enroll, presented to the student by
the school representative, that includes the following, in bold type and capital letters:
1. The course or course segment title within a curriculum,
2. The total credit hours applicable for licensure or renewal,
3. The cost of each course,
4. A statement of the refund policy, and
5. A statement of any job placement service.
F. The Department does not consider lists of employers given to graduates to be a placement service.
The school may advertise job placement services only if:
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1. Student referrals result from direct contact between the school placement service and
prospective employers,
2. Documented evidence of student referrals is maintained and includes:
a. The number of referrals to prospective employers per student,
b. Results of referrals,
c. Final placement or other disposition.
G. Complaints. The Commissioner may, and upon a verified complaint in writing shall, investigate and
observe the classes of any school, owner, administrator, director, or instructor acting on behalf of the
school and may examine the books and records of the school in connection with the offering of approved
courses.
H. Change in school, course, or instructor. Each school owner, operator, director, and instructor shall:
1. Provide a written notice and supporting documentation within 10 days of any:
a. Change of personal name or address,
b. Change of business address,
c. Change of business mailing address,
d. School closing, or
e. Disclosure of certification information pursuant to R4-28-301(A),
2. Provide a written notice and supporting documentation within 30 days after any change in
structure of a licensed entity, including any change of a:
a. Director, officer, or person holding or controlling 10% or more of the shares, if a
corporation;
b. Partner, if a partnership;
c. Member or manager, if a limited liability company.
3. Obtain approval from the Commissioner before conducting business when:
a. Changing a business name,
b. Establishing a school location,
c. Changing the course content,
d. Changing the course length, or
e. Offering a new course.
4. Provide written notice as soon as practical of a last minute change of instructor due to illness or
emergency.
R4-28-405. Business Brokerage Specialist Designation
A. The Department shall award the business brokerage specialist designation under A.R.S. § 32-2124(N)
to a real estate salesperson or broker or an applicant for licensure as a real estate salesperson or broker
who submits to the Department satisfactory proof that the licensee or applicant completed 24 credit hours
of courses on business brokerage, approved by the Department under R4-28-404, as follows:
1. Either two 12-hour courses or three eight-hour courses that contain instruction on business
brokerage practices, review and analysis of financial statements, including recasting, and
business valuation; and
2. The applicant passes an examination on each course.
B. A real estate salesperson or broker may request the designation from the Department by submitting to
the Department satisfactory proof from the International Business Broker Association of having taken the
courses and passed the course examinations described in subsection (A) within the five years before the
request.

ARTICLE 5. ADVERTISING
R4-28-502. Advertising by a Licensee
A. A salesperson or broker acting as an agent shall not advertise property in a manner that implies that
no salesperson or broker is taking part in the offer for sale, lease, or exchange.
B. Any salesperson or broker advertising the salesperson's or broker's own property for sale, lease, or
exchange shall disclose the salesperson's or broker's status as a salesperson or broker, and as the
property owner by placing the words "owner/agent" in the advertisement.

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C. A salesperson or broker shall ensure that all advertising contains accurate claims and representations,
and fully states factual material relating to the information advertised. A salesperson or broker shall not
misrepresent the facts or create misleading impressions.
D. A school shall include its name, address and telephone number in all advertising of Departmentapproved courses. The school owner, director, or administrator shall supervise all advertising. The school
owner shall ensure that the school's advertising is accurate.
E. A salesperson or broker shall ensure that all advertising identifies in a clear and prominent manner the
employing broker's legal name or the dba name contained on the employing broker's license certificate.
F. A licensee who advertises property that is the subject of another person's real estate employment
agreement shall display the name of the listing broker in a clear and prominent manner.
G. The designated broker shall supervise all advertising, for real estate, cemetery, or membership
camping brokerage services.
H. A licensee shall not use the term "acre," either alone or modified, unless referring to an area of land
representing 43,560 square feet.
I. Before placing or erecting a sign giving notice that specific property is being offered for sale, lease, rent,
or exchange, a salesperson or broker shall secure the written consent of the property owner, and the sign
shall be promptly removed upon request of the property owner.
J. The provisions of subsections (E) and (G) do not apply to advertising that does not refer to specific
property.
K. Trade Names.
1. Any broker using a trade name owned by another person on signs displayed at the place of
business shall place the broker's name, as licensed by the Department on the signs;
2. The broker shall include the following legend, "Each (TRADE NAME or FRANCHISE) office is
independently owned and operated," or a similar legend approved by the Commissioner, in a
manner to attract the attention of the public.
L. The use of an electronic medium, such as the Internet or web site technology, that targets residents of
this state with the offering of a property interest or real estate brokerage services pertaining to property
located in this state constitutes the dissemination of advertising as defined in A.R.S. § 32-2101(2).
R4-28-503. Promotional Activities
A. A licensee shall not describe a premium offered at no cost or reduced cost to promote sales or leasing
as an "award," or "prize," or use a similar term.
B. A licensee shall clearly disclose to a person in writing the terms, costs, conditions, restrictions, and
expiration date of an offer of a premium before the person participates in the offer.
C. Unless otherwise provided by law, a person shall not solicit, sell, or offer to sell an interest in a
development by conducting a lottery contest, drawing, or game of chance.
D. A subdivider, time-share developer, or membership camping operator may apply for approval to
conduct a lottery, contest, drawing, or game of chance, or award a premium under A.R.S. § 322197.17(J), by submitting to the Department the information under A.R.S. §§ 32-2183.01(I), 322197.17(J) or 32-2198.10(D), the applicable fee, if any, and:
1. The name, address, telephone number, and fax number, if any, of the subdivider, time-share
developer, or operator;
2. The legal name of the broker;
3. The public report number;
4. The time and location for collecting entries for the lottery, contest, or drawing;
5. The date, time, and site for selection of a winner; and
6. The conditions and restrictions to enter, if any.
R4-28-504. Development Advertising
A. If a developer obtains a conditional sales exemption, under R4-28-B1202, or registers a notice of intent
with the Department to accept lot reservations under A.R.S. § 32-2181.03, the developer shall disclose on
all advertising that only reservations or conditional sales contracts will be taken until the public report has
been issued.
B. Only a developer or the developer's authorized representative shall file advertising for a development
under A.R.S. §§ 32-2183.01(A), 32-2194.05(A), 32-2195.05(A), 32-2197.17(A) or 32-2198.01(A)(6) with
the Department.
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C. A developer shall ensure that advertisement of property in a development includes the name of the
development as registered with the Department. The Commissioner may waive application of this
subsection if the Commissioner determines that the public interest is not affected.
D. A developer shall not advertise a monthly payment, total price, or interest rate that is not available to
all prospective purchasers or is restricted, unless the lack of availability or the restriction is conspicuously
disclosed to all prospective purchasers within the advertisement.
E. A developer shall not advertise proposed or incomplete improvements unless the following
requirements are met:
1. The estimated date of completion is specified or, if there is no estimated date of completion,
the developer includes a prominent disclosure in the advertisement that the improvement is
proposed only and no warranty is given or implied that the improvement will be completed; and
2. If a completion date is specified, the developer has submitted to the Department evidence to
satisfactorily demonstrate to the Department that the completion and operation of the facilities are
assured and that completion will be within the time represented in the advertisement or
promotional material.
F. The developer shall not reference a proposed public facility or project that purports to effect the value
or utility of an interest in a development without disclosing in writing the existing status of the proposed
facility. The developer shall base the disclosure upon information supplied or verified by the authority
responsible for the public facility or project and shall forward the information to the Department.
G. Pictorial or illustrative depictions, other than unmodified photographs of the property being offered,
shall bear a prominent disclosure identifying the nature of the depiction, such as an artist's conception,
and shall identify those improvements that are proposed and not in existence.
H. When a pictorial representation is used in an advertisement for a specific development and is not an
actual or accurate representation of the property, a statement within the advertisement shall prominently
disclose the distance of the pictorial representation from the advertised property.
I. If a map or diagram is used to show the location of the development in relation to other facilities, actual
road miles from each facility to the development shall be shown on the map or diagram.
J. A developer shall not expressly state or imply that a facility is available for the exclusive use of
purchasers of lots or interests if a public right of access or public use of the facility exists.
K. A developer shall not refer to availability for use of private clubs or facilities in which the owner will not
acquire a proprietary interest through purchase of an interest in the development unless a disclosure is
made in the advertisement. The disclosure shall affirmatively state the existence of the facilities and that
availability for use by owners of an interest in the development is at the pleasure of the owners of the
facility.
L. When a standing body of water is described as a feature of a development, all advertising shall indicate
the average surface area of the body of water. If a standing body of water or a flowing waterway
described as a feature of a development is not permanent, or fluctuates substantially in size or volume,
the developer shall disclose this fact in all advertisements describing the feature.
M. At the time an incentive is offered to visit any place where a sales presentation for a development is to
be made and before the recipient of the incentive makes the trip, the developer shall disclose in writing all
conditions, limitations, or recipient qualifications that will be applied.
N. A developer shall not include in advertising testimonials or endorsements that contain statements that
a salesperson or broker would be precluded by law from making on the salesperson's or broker's behalf.

ARTICLE 7. COMPENSATION
R4-28-701. Compensation Sharing Disclosure
A real estate broker shall disclose to all the parties in a transaction, in writing before closing, the name of
each employing broker who represents a party to the transaction and who will receive compensation from
the transaction.

ARTICLE 8. DOCUMENTS

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R4-28-802. Conveyance Documents
A. Upon execution of any transaction document a salesperson or broker shall, as soon as practical,
deliver a legible copy of the signed document and final agreement to each party signing the document.
B. During the term of a listing agreement, a salesperson or broker shall promptly submit to the
salesperson's or broker's client all offers to purchase or lease the listed property. Upon receiving
permission from the seller or lessor, the salesperson or broker acting on behalf of the seller or lessor may
disclose to all offerors or their agents the existence and terms of all additional offers on the listed
property. The salesperson or broker shall submit to the client all offers made prior to closing and is not
released from this duty by the client's acceptance of an offer unless the client instructs the salesperson or
broker in writing to cease submitting offers or unless otherwise provided in the listing agreement, lease, or
purchase contract. The salesperson or broker may voluntarily submit offers to the seller or lessor
regardless of any limitations contained in the listing agreement and may submit offers after the listing
agreement is terminated.
C. Transaction statements. In addition to the requirements of A.R.S. §§ 32-2151.01 and 32-2174, the
broker shall retain true copies of all receipts and disbursements, or copies of the executed and delivered
escrow closing statements that evidence all receipts and disbursements in the transaction.
R4-28-803. Contract Disclosures
A. A developer or the developer's agent shall ensure that any agreement or contract for the sale or lease
of a property interest in a development that requires a public report contains substantially the following
language in bold print or print larger than the other print used in the document above the signature portion
of the document: THE DEVELOPER SHALL GIVE A PROSPECTIVE PURCHASER A COPY OF THE
PUBLIC REPORT AND AN OPPORTUNITY TO READ AND REVIEW IT BEFORE THE PROSPECTIVE
PURCHASER SIGNS THIS DOCUMENT.
B. A developer or the developer's agent shall ensure that any agreement or contract for the sale or lease
of a property interest in a development conspicuously discloses the nature of the document at or near the
top of the document.
C. The contract shall indicate where the earnest money or down payment, if any, will be deposited and
shall include the name of the title company, the name of the broker's trust account, or other depository.
D. Any agreement or contract for the sale or lease of a property interest in a development where a down
payment, earnest money deposit, or other advanced money, if any, is paid directly to the seller and not
placed in a neutral escrow depository, shall conspicuously disclose this fact within the document, and the
purchaser shall sign or initial this provision indicating approval in the space adjacent to or directly below
the disclosure in the purchase contract or agreement of sale. The following disclosure shall be written in
large or bold print and shall be included in the public report, purchase contract, and agreement of sale:
Prospective purchasers are advised that earnest money deposits, down payments, and other advanced
money will not be placed in a neutral escrow. This money will be paid directly to the seller and may be
used by the seller. This means the purchaser assumes a risk of losing the money if the seller is unable or
unwilling to perform under the terms of the purchase contract.
R4-28-804. Rescission of Contract
A. Any agreement or contract for the purchase or lease of an unimproved subdivided lot, or any
unsubdivided land, shall contain substantially the following language in bold print or print larger than the
other print used in the document above the signature portion of the document: The purchaser or lessee
has the legal right to rescind (cancel) this agreement without cause or reason of any kind, and to the
return of any money or other consideration by sending or delivering a written notice of rescission to the
seller or lessor by midnight of the seventh calendar day following the day the purchaser or lessee
executed the agreement. If the purchaser or lessee does not inspect the lot or parcel before the execution
of the agreement, the purchaser or lessee shall have six months to inspect the lot or parcel, and at the
time of inspection shall have the right to unilaterally rescind the agreement.
B. Any agreement or contract for the purchase or lease of a time-share interval shall contain substantially
the following language in bold print or print larger than the other print used in the document above the
signature portion of the document: The purchaser or lessee has the legal right to rescind (cancel) this
agreement without cause or reason of any kind by sending or delivering a written notice of rescission to
the seller or lessor by midnight of the seventh calendar day following the day the purchaser or lessee
executed the agreement.
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C. An opportunity to exercise the seven-day right of rescission shall be provided by conspicuously
disclosing the complete current name, address, and telephone number of the seller on the face of all
agreements and contracts.
R4-28-805. Public Report Receipt
When a public report is required, the developer shall complete the following public report receipt and
obtain the purchaser's signature to verify that the prospective purchaser has received a copy of the public
report:
PUBLIC REPORT RECEIPT
The developer shall furnish you, as a prospective customer, with a copy of the public report required by
the Arizona Department of Real Estate. It is recommended that you read the report before you make any
written offer to purchase or lease an interest in the development and before you pay any money or other
consideration toward the purchase or lease of an interest in the development.
FOR YOUR PROTECTION, DO NOT SIGN THIS RECEIPT UNTIL YOU HAVE RECEIVED A COPY OF
THE REPORT AND HAVE HAD THE OPPORTUNITY TO READ IT. BY SIGNING THIS RECEIPT, THE
BUYER HAS ACCEPTED THE PUBLIC REPORT AND ACKNOWLEDGES THE INFORMATION IT
CONTAINS.
_____________________ ______________________
Public Report Registration No. Development Name and Lot No.
I understand the report is not a recommendation or endorsement of the development by the Arizona
Department of Real Estate, but is for information only.
_____________________ ______________________
Buyer's Name Address
_____________________ ______________________
Date

ARTICLE 11. PROFESSIONAL CONDUCT
R4-28-1101. Duties to Client
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:
1. Any information that the seller or lessor is or may be unable to perform;
2. Any information that the buyer or lessee is, or may be, unable to perform;
3. Any material defect existing in the property being transferred; and
4. The existence of a lien or encumbrance on the property being transferred.
C. A licensee shall expeditiously perform all acts required by the holding of a license. A licensee shall not
delay performance, either intentionally or through neglect.
D. A licensee shall not allow a controversy with another licensee to jeopardize, delay, or interfere with the
initiation, processing, or finalizing of a transaction on behalf of a client. This prohibition does not obligate
a licensee to agree to alter the terms of any employment or compensation agreement or to relinquish the
right to maintain an action to resolve a controversy.
E. A real estate salesperson or broker shall not act directly or indirectly in a transaction without informing
the other parties in the transaction, in writing and before the parties enter any binding agreement, of a
present or prospective interest or conflict in the transaction, including that the:
1. Salesperson or broker has a license and is acting as a principal;
2. Purchaser or seller is a member of the salesperson's, broker's, or designated broker's
immediate family;

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3. Purchaser or seller is the salesperson's or broker's employing broker, or owns or is employed
by the salesperson's or broker's employing broker; or
4. Salesperson or broker, or a member of the salesperson's or broker's immediate family, has a
financial interest in the transaction other than the salesperson's or broker's receipt of
compensation for the real estate services.
F. A salesperson or broker shall not accept compensation from or represent more than one party to a
transaction without the prior written consent of all parties.
G. A salesperson or broker shall not accept any compensation, including rebate or other consideration,
directly or indirectly, for any goods or services provided to a person if the goods or services are related to
or result from a real estate transaction, without that person's prior written acknowledgement of the
compensation. This prohibition does not apply to compensation paid to a broker by a broker who
represents a party in the transaction.
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. A salesperson or broker shall not undertake
to provide professional services concerning a type of property or service that is outside the salesperson's
or broker's field of competence without engaging the assistance of a person who is competent to provide
those services, unless the salesperson's or broker's lack of expertise is first disclosed to the client in
writing and the client subsequently employs the salesperson or broker.
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.
J. A salesperson or broker shall not:
1. Permit or facilitate occupancy in a person's real property by a third party without prior written
authorization from the person; or
2. Deliver possession prior to closing unless expressly instructed to do so by the owner of the
property or property interest being transferred.
K. A salesperson or broker shall recommend to a client that the client seek appropriate counsel from
insurance, legal, tax, and accounting professionals regarding the risks of pre-possession or postpossession of a property.
R4-28-1102. Property Negotiations
Except for owner listed properties, negotiations shall be conducted exclusively through the principal's
broker or the broker's representative unless:
1. The principal waives this requirement in writing, and
2. No licensed representative of the broker is available for 24 hours.
R4-28-1103. Broker Supervision and Control
A. An employing broker and a designated broker shall exercise reasonable supervision and control over
the activities of brokers, salespersons, and others in the employ of the broker. Reasonable supervision
and control includes the establishment and enforcement of written policies, procedures, and systems to:
1. Review and manage:
a. Transactions requiring a salesperson's or broker's license; and
b. Use of disclosure forms and contracts and, if a real estate broker, real estate
employment agreements under A.R.S. § 32-2151.02;
2. Manage:
a. Filing, storing, and maintaining documents pertaining to transactions under subsection
(A)(5)(a);
b. Handling of trust funds; and
c. Use of unlicensed assistants by a salesperson or broker;
3. Oversee delegation of authority to others to act on behalf of the broker;

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4. Familiarize salespersons and associate brokers with the requirements of federal, state, and
local laws relating to the practice of real estate, or the sale of cemetery property or membership
camping contracts; and
5. Review and inspect:
a. Documents that may have a material effect upon the rights or obligations of a party to
a transaction; and
b. Advertising and marketing by the broker and by salespersons, brokers, and others in
the broker's employ.
B. A designated broker shall establish a system for monitoring compliance with statutes, rules, and the
employing broker's policies, procedures, and systems.
C. A designated broker shall supervise associate brokers, salespersons, and employees of the employing
broker and shall exercise reasonable supervision and control over activities by the employing broker for
which a license is required.
D. An employing broker is responsible for the acts of all associate brokers, salespersons, and other
employees acting within the scope of their employment.
E. A designated broker may use the services of employees to assist in administering the provisions of this
Section but shall not relinquish overall responsibility for supervision and control of the acts of the
employing broker's employees.
F. A designated broker who, upon learning of a violation of real estate statutes or rules by a salesperson
or associate broker under the broker's supervision, immediately reports the violation to the Department is
not subject to disciplinary action by the Department for failure to supervise the salesperson or broker.
G. If an employing broker maintains one office and employs a designated broker, no more than one other
licensed person, and no more than one unlicensed person, the employing broker and designated broker
are not required to develop and maintain written policies, procedures, and systems as described in
subsection (A).

PART A. APPLICATION FOR PUBLIC REPORT, CERTIFICATE OF AUTHORITY, OR
SPECIAL ORDER OF EXEMPTION
R4-28-A1201. Development Name; Lot Sales; Applicant
A. Any person may submit a development application for a public report, a certificate of authority, or a
special order of exemption, provided the applicant has a recorded ownership interest in the land, such as
a deed, option, beneficial interest in a trust, or other recorded interest approved by the Commissioner.
The application for a public report or certificate of authority shall contain the following information, as
applicable:
1. The name of the development or cemetery, as shown on the recorded map, and the marketing
name if one will be used;
2. The list of the lots to be offered, including the description of the sales offering;
3. The name, address, telephone number, and fax number, if any, of the applicant; and
4. The applicable information in this Article, Parts A and B.
B. If the applicant is a corporation, the application shall contain the following information:
1. A Certificate of Good Standing from the Arizona Corporation Commission, dated no earlier
than one year from the date of the application;
2. A corporate resolution, authorizing the person signing the application on behalf of the
corporation; and
3. The name and address of each officer, director, and shareholder controlling or holding more
than 10% of the issued and outstanding common shares, or 10% of any other proprietary,
beneficial, or membership interest in the entity.
C. If the applicant is a partnership, the application shall contain the following information:
1. A copy of all partnership agreements;
2. Proof of registration with the Secretary of State if any partnership is a limited partnership,
foreign or domestic;
3. If the general partner is a corporation, the information requested in subsection (B);
4. If the general partner is a limited liability company, the information requested in subsection (D);
and

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5. The name and address of each partner in the partnership.
D. If the applicant is a limited liability company, the application shall contain the following information:
1. A copy of the Articles of Organization, stamped "Received and Filed" by the Arizona
Corporation Commission. If more than one year has elapsed between the original filing with the
Arizona Corporation Commission and the filing date of the development application, a Certificate
of Good Standing from the Arizona Corporation Commission is required;
2. A copy of the operating agreement and any amendments;
3. If not included in the operating agreement or Articles of Organization, a copy of the company
resolution signed by all members stating whether management of the limited liability company is
established as manager-controlled or member-controlled and the name of the member or
manager appointed to act on behalf of the company and sign the application;
4. The name and address of each member, manager, and managerial employee, and the name
and address of any person controlling or holding more than 10% of the membership interest in
the limited liability company;
5. If a member is a corporation, the information requested in subsection (B);
6. If a member is a partnership, the information requested in subsection (C).
E. If the applicant is a trust, the application shall contain the name and address of each trustee,
beneficiary, and anyone in control of the trust.
F. If the applicant is a subsidiary corporation, the application shall contain the name and address of the
parent corporation.
R4-28-A1202. Development Map; Location; Land Characteristics
A. The applicant shall submit a legible copy, no larger than 11" x 17", of the recorded development map
showing, as applicable:
1. The county recorder's recording information, including the book and page of maps and
recording date;
2. County or city approval;
3. Applicable dedications;
4. Monuments, distances, and bearings; and
5. Registered land surveyor certification.
B. The applicant shall identify the location of the development, including the street, city, county, and state,
and:
1. The miles and direction from the nearest city or town, if applicable; and
2. The most direct route for getting to the development from a federal, state, county, or city road.
C. The application shall include a description of the physical characteristics of the land and any unusual
factors that may affect it, such as if it has level or hilly terrain, rocky, loose, or alkaline soil, and
1. The gross acreage of the development;
2. The total number of lots within the development, including a description of phasing, if
applicable; and
3. Whether and how lots are permanently or temporarily staked or marked for easy location.
R4-28-A1203. Flood and Drainage; Land Uses; Adverse Conditions
The applicant shall state, or include as applicable:
1. Whether the development is subject to any known flooding or drainage problems and a letter
bearing the signature and seal of a professional civil, city, and county engineer, or county flood
district detailing the drainage conditions and flood hazards. The letter shall include the effect of
any flood plain and its location, the effect of a 100 year frequency storm, and whether flood
insurance is required.
2. Whether the development lots are subject to subsidence or expansive soils. If subsidence or
expansive soils exist, a professional engineer's letter addressing the effects of the condition,
remedies, and a buyer's on-going responsibilities in plain language;
3. A description of the existing and proposed land uses in the vicinity of the development that may
cause a nuisance or adversely affect lot owners, such as freeways, airports, sewer plants,
railroads, and canals, including:
a. Any unusual safety factors within or near the development, and
b. A description of all current and proposed adjacent land uses.
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4. Whether the development is affected by any unusual or unpleasant odors, noises, pollutants,
or other nuisances;
5. A description of any agricultural activity or condition in the area that may adversely affect a lot
owner, including any odors, cultivation and related dust, agricultural burning, application of
pesticides, or irrigation and drainage;
6. Whether the development lots are subject to any known geological or environmental condition
that would or may be detrimental to a purchaser's health, safety, or welfare; or
7. Whether the development lots are located within the boundary of a federal, designated
Superfund site or a state designated Water Quality Assurance Revolving Fund site.
R4-28-A1204. Utilities
The applicant shall include information about electrical, telephone, and natural gas utilities available to the
development, including:
1. The names, addresses, and telephone numbers of the electrical, telephone, and natural gas
company that will provide service;
2. The location of existing electrical, telephone, and natural gas utilities in relation to the
development;
3. The name of each person responsible for extending each utility to the lot lines;
4. The estimated completion date for extending each utility to the lot lines;
5. If the developer will only install conduit, a description of the arrangement made to complete
operational utilities to lot lines;
6. The estimated cost a lot purchaser will be required to pay for completion of each utility to the
purchaser's lot line, and, if the offer is for unimproved lots, the estimated costs to provide service
from the lot line to the dwelling;
7. Upon completion of the utilities, other costs or requirements that must be addressed before the
lot purchaser receives service, including the current service charges, hookup fees, turn-on fees,
meter fees, and fees for pulling wire through conduit;
8. If propane gas will be used, a letter from the supplier stating that it will be providing service to
the development, with a description of requirements to be met and costs to be paid by the lot
purchaser for receiving the service; and
9. If street lights will be available, the person responsible for completion, the estimated
completion date and the person who will pay for the electricity.
R4-28-A1205. Water Supply
An applicant shall include information about any water supply to the development, including:
1. The type of water provider such as a municipal system, improvement district, public utility,
private water company, co-operative, irrigation district, private well, water hauler, or other source;
2. The name, address, and telephone number of the water provider;
3. The compliance status of the water provider with federal and state environmental laws, as of
the date of the application. If in noncompliance, provide an explanation;
4. The location of the water lines closest to the development;
5. The name of the person responsible for extending the water lines to the lot lines;
6. The estimated completion date for extending the water lines to the lot lines;
7. The estimated cost a lot purchaser will be required to pay for completion of the water lines to
the purchaser's lot line;
8. The estimated cost a lot purchaser will pay for completion of water lines from the lot line to a
dwelling;
9. Other costs or requirements before the lot purchaser receives water service, including the
current service charges, hookup fees, turn-on fees, meter fees, and development fees;
10. The name of the person responsible for maintenance of the water lines within the
development, other than from lot line to dwelling;
11. The name of the person who is or will be responsible for maintenance of the water lines
outside the development;
12. If a private well will be used, a description of the requirements and costs involved to install an
operational domestic water system;

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13. If the source of water is a private well and domestic water cannot be obtained from a private
well, whether the purchaser will be offered a refund of the purchase price and if so, an
explanation of any condition or restriction involving the refund;
14. The name and location of the water provider if domestic water will be transported or hauled by
the lot purchaser. A cost estimate computed on a monthly basis for a four-member family,
including the cost of water, cistern, and other holding tanks, pumps, or any other costs necessary
to install an operational water system;
15. A water adequacy report from ADWR if the development is a subdivision or part of a
subdivision located outside of a groundwater active management area;
16. A water availability report from ADWR if the development is unsubdivided land. A copy of the
report or a brief summary of the report, approved by the Department, shall be displayed in all
promotional material and contracts for sale; and
17. If a water provider is a public service corporation, whether a Certificate of Convenience and
Necessity from the Arizona Corporation Commission has been issued and, if not, an explanation
of why a Certificate has not been issued.
R4-28-A1206. Sewage Disposal
The applicant shall include information about sewage disposal for the development, including:
1. Whether the sewage disposal will be provided by a municipality, improvement district, public
utility, private company, or individual sewage disposal system;
2. The name, address, and telephone number of the sewage disposal company;
3. The compliance status of the sewage disposal provider with the ADEQ as of the date of the
application. If in noncompliance, provide an explanation;
4. The name of the person responsible for extending the sewage disposal utility to the lot lines;
5. The estimated completion date for extending the utility to the lot lines;
6. The estimated cost the lot purchaser will be required to pay for completion of the utility to the
purchaser's lot line;
7. If offering an unimproved lot, the estimated cost a lot purchaser will pay for completion of the
utility from the lot line to the dwelling;
8. Upon completion of the utility, other costs or requirements that must be addressed before the
lot purchaser receives service, including the service charge, hookup fees, tap-in fees, and
development fees;
9. The name of the person responsible for maintenance of the sewage disposal utility within the
development, other than from lot line to dwelling;
10. The name of the person who is or will be responsible for maintenance of the sewage disposal
utility outside the development;
11. What cost, if any, will the lot purchaser pay toward maintenance of the sewage disposal utility;
12. If a sewage disposal provider is a for-profit public service corporation, whether a Certificate of
Convenience and Necessity from the Arizona Corporation Commission has been issued, and if
not, an explanation of why a Certificate has not been issued;
13. A description of the type of individual sewage disposal system the lot purchaser will be
required to install in accordance with the standards and requirements of ADEQ or its designee;
14. A description of all requirements and costs involved to install an operational individual sewage
disposal system, including any cost for governmental licensing and permitting, equipment, and
other installation, maintenance, and operation costs;
15. If an operational individual sewage disposal system cannot be installed, will the lot purchaser
be offered a refund of the purchase price, and if so, an explanation of any condition or restriction
involving the refund; and
16. If a dry sewer system will be installed for future connection to a future provider, the name of
the future provider, all requirements and costs for lot purchasers, and the estimated connection
date.
R4-28-A1207. Streets and Access
A. The applicant shall include a statement attesting that:
1. Exterior streets providing access are private; or federal, state, and county highways; or
municipal streets;
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2. The interior streets are public or private; and
a. If any streets are private, a description of what provisions have been made to assure
purchasers of a legal right to use the private streets;
b. Whether the streets are completed;
c. The standards to which the streets will be or are constructed;
d. If the streets are not completed, the person responsible for completion and the
estimated completion date;
e. The type of existing and proposed surfacing;
f. The cost, if any, the lot purchaser will pay toward street completion;
g. The name of the person responsible for exterior and interior street maintenance;
h. Whether a city or county is responsible for maintaining the streets and the approximate
date when streets will be accepted for maintenance; and
i. The cost, if any, the lot purchaser will pay toward street maintenance.
B. The applicant shall demonstrate that there is permanent access to the land over terrain that may be
traversed by conventional 2-wheel drive automobiles and emergency vehicles by providing any of the
following information or documents necessary to make the demonstration:
1. A statement from a title insurance company, signed by an authorized title officer, affirming that
legal access exists to the development and lots within the development. The statement shall:
a. Describe the legal access by listing all recorded instruments which establish legal
access,
b. Be accompanied by a map on which legal access is shown with accurate references to
the recorded instruments,
c. Be accompanied by a legible copy of each recorded instrument listed in the statement.
2. A statement bearing the seal and signature of a registered land surveyor or professional
engineer, affirming that legal access to and within the development, as described in the title
insurance company legal access statement, is over terrain that can be traversed by conventional
2-wheel drive automobiles and emergency vehicles. The statement shall affirm that:
a. The legal access corresponds with the actual physical access to the development and
to the lots,
b. The legal access is permanent and describe how that permanence is assured.
3. The recorded subdivision map which shows approval by the applicable city or county officials.
4. Recorded easements or road dedications whether public or private. If private, the applicant
shall ensure that development lot owners, emergency vehicles, and utility service providers have
access rights.
5. Land, on which easements and roads are provided, is traversable by conventional 2-wheel
drive automobiles and emergency vehicles.
6. Road maintenance programs that assure permanent access. Road maintenance programs
include those administered by city or county governments, city or county improvement districts, or
private property owner associations.
7. Recorded documentation that establishes legal and permanent access for development lot
owners through federal or state lands.
R4-28-A1208. Flood Protection and Drainage Improvements
The applicant shall include with the application the following information about flood protection and
drainage improvement:
1. A description of any current or proposed improvement;
2. The name of the person responsible for completion of the improvement;
3. The estimated completion date of the improvement;
4. The cost, if any, the lot purchaser will pay for completion of the improvement;
5. The name of the person responsible for the continuing maintenance and expense of the
improvement;
6. If a city or county is responsible for maintenance, the approximate date when the improvement
will be accepted for maintenance; and
7. The cost, if any, the lot purchaser will pay toward completion and maintenance of the
improvement.

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R4-28-A1209. Common, Community, or Recreational Improvements
The applicant shall provide with the application a list of all common, community, or recreational
improvements, located within the development, and include the following information:
1. The name of the person responsible for completion of each improvement;
2. The estimated completion date of each improvement;
3. The estimated cost a lot purchaser will be required to pay for the completion of each
improvement;
4. The name of the person responsible for the continuing maintenance and expense of each
improvement; and
5. The cost, if any, the lot purchaser will be responsible for paying toward the maintenance of
each improvement.
R4-28-A1210. Master Planned Community
The applicant shall include the following information about a master planned community:
1. A list of all improvements located outside the development, but included in the development
offering, including all common, community and recreational improvements;
2. The name of the person responsible for completing each improvement;
3. The estimated completion date of each improvement;
4. The name of the person responsible for the continuing maintenance and expense of each
improvement; and
5. The cost, if any, the lot purchaser will pay toward the completion and maintenance of each
improvement.
R4-28-A1211. Assurances for Completion and Maintenance of Improvements
A. The applicant shall identify:
1. Whether arrangements have been made to assure the completion, delivery, and continued
maintenance of the improvements listed in subsections R4-28-A1204 through R4-28-A1210; and
2. Whether the assurances to complete and deliver the improvements have been approved by the
county or city, where applicable, and if so, submit a copy of the county or city approval;
B. An applicant shall provide one or more of the following assurances for completion:
1. A surety or completion bond from an insurance company licensed in Arizona with a rating of
good or higher from a rating agency and a copy of the rating. The bond shall specify which
improvements are included and shall:
a. Be stipulated by and payable to a third party who is not the developer;
b. Be accepted and signed by all parties;
c. Include an expiration date not less than 90 days beyond the last improvement
estimated completion date;
d. State when and how the third party may draw on the funds;
e. Be in an amount 10% greater than the estimated amount to complete all
improvements; and
f. Include a registered engineer's, architect's, or contractor's cost estimate to complete
the improvements.
2. An irrevocable letter of credit from a financial institution licensed to do business in Arizona. The
irrevocable letter of credit shall specify which improvements are included and shall:
a. Be stipulated by and payable to a third party who is not the developer;
b. Be accepted and signed by all parties;
c. Include an expiration date not less than 90 days beyond the last improvement
estimated completion date;
d. State when and how the third party may draw on the funds;
e. Be in an amount 10% greater than the estimated amount to complete all
improvements;
f. Include a registered engineer's, architect's, or contractor's cost estimate to complete
the improvements;
g. State that repayment is the responsibility of the developer and not of the third party;
and
h. State that the irrevocable letter of credit is noncancelable.
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3. A loan commitment and agreement from a lender licensed in Arizona. The loan commitment
and agreement shall specify which improvements are included and shall:
a. Be stipulated by and payable to a third party who is not the developer;
b. Be accepted and signed by all parties;
c. Include an expiration date not less than 90 days beyond the last improvement
estimated completion date;
d. State when and how the third party may draw on the funds;
e. Be in an amount 10% greater than the estimated amount to complete all
improvements;
f. Include a registered engineer's, architect's, or contractor's cost estimate to complete
the improvements; and
g. State that repayment is the responsibility of the developer and not of the third party
even if the third party draws on the funds.
4. A trust or escrow account with a financial institution or escrow company licensed in Arizona.
The trust or escrow account shall specify which improvements are included and shall:
a. Be stipulated by and payable to a third party who is not the developer;
b. Be accepted and signed by all parties;
c. Include an expiration date not less than 90 Days beyond the last improvement
estimated completion date;
d. State when and how the third party may draw on the funds;
e. Be in an amount 10% greater than the estimated amount to complete all
improvements;
f. Include a registered engineer's, architect's, or contractor's cost estimate to complete
the improvements; and
g. Directly pay for the improvements completed or release funds to the developer upon
written verification from a registered engineer that the improvements have been
completed in accordance with the plan.
5. City and county trust agreement. A municipal or county government may enter into an
assurance agreement with a trustee to hold a lot conveyance until improvements are completed:
a. The trustee is an escrow company licensed in Arizona, and
b. The agreement is recorded.
6. Written escrow agreement. A developer may enter into a written escrow agreement with a title
insurance company or escrow company to escrow all funds and prohibit close of escrow until all
improvements are complete. The agreement shall contain the following stipulations:
a. The funds are not released nor the purchaser's deed or other relevant documents
recorded until the developer's architect or engineer certifies to the Department and the
escrow agent that the project is complete, ready for occupancy, and in compliance with
all city and county requirements;
b. If the completion date is not met:
i. The developer will give purchasers notice that completion dates were not met
and an updated completion schedule,
ii. A purchaser may, within 30 days of receiving the notice specified in subsection
(B)(6)(b)(i), cancel and receive a full refund by sending written notice to the
escrow agent,
iii. The public report is invalid and all sales are suspended; and
iv. The Department considers the public report valid if improvements are
completed at a later date and the public report is complete and accurate.
7. Subdivision assurances. The municipal or county government shall prohibit occupancy and an
subdivider shall not close escrow on lots sold in a subdivision until all proposed or promised
subdivision improvements are complete.
a. The subdivider shall submit an agreement or copy of the ordinance from the city or
county prohibiting occupancy until all proposed or promised subdivision improvements
are complete.
b. If improvements are completed in phases, the subdivider shall submit complete details
of the phasing program, including approval of the phasing by the city or county and the
completion schedule for the phases to the Department.
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c. The subdivider shall submit a written statement that no escrow will close on any lot
until all subdivision improvements are complete. If a lot is within a phase of the
subdivision where all improvements are complete and can be used and maintained
separately from the improvements required for the entire subdivision the escrow may be
closed.
d. The subdivider shall submit a copy of the subdivider's purchase contract containing in
large or bold print the condition that escrow will not close until the city or county issues its
occupancy clearance and all subdivision improvements are complete.
e. Any improvement offered or promised to a purchaser that is scheduled for completion
in a later phase of completion shall have its completion assured by an alternative method
of assurance listed in this Section.
f. If the subdivider's sales include unimproved (vacant) lots, the subdivider shall deposit
all earnest money into a neutral escrow depository until escrow closes.
8. Any other assurance satisfactory to the Department that is not listed in subsections (B)(1)
through (B)(7).
C. If the construction of any improvement is completed in phases, the applicant shall provide a description
of the phased schedule of completion, including the lots in each phase and estimated completion dates.
R4-28-A1212. Schools and Services
A. The applicant shall include the following information about schools:
1. The location of and distance to the nearest public elementary, junior, and high schools and
whether school bus or other transportation is available;
2. The type and location of any other school located within a 1/2 mile radius of the exterior
boundaries of the development.
B. The applicant shall include the following information about services:
1. Community shopping. The location and distance from the development of the nearest
community shopping area where food, drink, and medical supplies may be purchased;
2. Public transportation. The type, provider, location, and distance to the nearest access point to
public transportation for the development;
3. Medical facility. The type, provider, location, and distance to the nearest medical facility;
4. Fire protection. Whether fire protection is available to the development, the name of the
provider and the cost to the lot purchaser;
5. Ambulance service. Whether ambulance service is available to the development and whether
the development is in a 911 service area. If 911 service is not available, the name, address, and
telephone number of the ambulance service.
6. Police service. Whether police service is available to the development, and the name of the
provider;
7. Refuse collection. Whether provisions have been made for refuse collection, the name of the
service provider, and the cost to the lot purchaser. If no provisions have been made, what a buyer
will do to dispose of refuse.
R4-28-A1213. Property Owners' Association
The applicant shall provide the following information about a property owner's association:
1. The name of the association, if any;
2. The name of the master property owners' association, if any;
3. The amount of the association assessment that property owners will be required to pay, and
how it will be paid;
4. Whether the association is legally formed and operational;
5. When and under what conditions control of the association will be released to lot purchasers;
6. When and under what conditions title to the common areas will be transferred to the
association;
7. Whether the common areas are subject to any lien or encumbrance. If yes, explain how
purchasers' use and enjoyment of common areas will be protected in the event of default;
8. Whether all lot owners will be required to be members of the association. If not, explain;
9. Whether nonmembers will be liable for payments to the association; and
10. A copy of the Articles of Incorporation and Bylaws in effect.
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R4-28-A1214. Development Use
The applicant shall provide the following information about development use:
1. Whether unimproved (vacant) lots or improved (with building) lots will be sold or leased;
2. The use for which development lots will be offered and an identification of the lots and their
proposed use if more than one use is contemplated;
3. Whether the development or any lot is subject to adult occupancy or age restrictions;
a. If yes, explain the restriction;
b. If yes, explain whether this restriction is in compliance with the Federal Fair Housing
Act.
4. Whether all or any portion of the development is located in an open range or area in which
livestock may roam at large under the laws of this State and what provisions, if any, have been
made for the fencing of the development to prevent livestock from roaming within the
development and on a purchaser's lot. If land is located in an open range or area in which
livestock may roam at large, the purchase contract shall contain:
a. Any provisions for the fencing of the development to prevent livestock from roaming
within the development; and
b. Any fencing requirements for the buyers to prevent livestock from roaming on their
property.
5. Whether mineral rights are, or will be, reserved from the development lots and what the effect
will be on lot owners if the minerals are extracted from the development; and
6. A full written disclosure of any condition or provision not specified in subsections (1) through
(5) that may limit the use or occupancy of the property.
R4-28-A1215. Development Sales
The applicant shall provide a description of the sales offering and:
1. A description of how sales or leases will be made and the manner by which title, right, or other
interest is to be conveyed to the purchaser, including copies of sales and lease transaction
documents;
2. Indicate whether cash sales are allowed and when the purchaser takes title;
3. Indicate where the purchaser's deposit and earnest monies will be deposited and held;
4. If the deposit monies are available for use by the seller, when and under what conditions the
monies will be refunded;
5. Indicate when the lot purchaser will be permitted to use and occupy the lot;
6. An explanation if the purchaser will not receive title free and clear of all liens;
7. The estimated average sales price for the lots;
8. Indicate whether any of the property will be leased, and if so;
a. Provide a description of any provision for increase of rental payments during the term
of the lease and any provisions in the lease prohibiting assignment or subletting, or both;
b. Indicate whether the lease prohibits the lessee from mortgaging or otherwise
encumbering the leasehold; and
c. Indicate whether the lessee is permitted to remove an improvement when the lease
expires.
9. The name, address, and telephone number of the Arizona broker who will be responsible for
sales. If none, explain why;
10. The name and telephone number of the custodian of the development records and the
physical location where the records will be kept;
11. Indicate whether the property has been or will be offered for sale before the date of the
development application. If yes, explain; and
12. Indicate whether the sales documents contain all contract disclosures required by rule and
statute.
R4-28-A1216. Title Reports and Encumbrances
The applicant shall provide the following information concerning title reports and encumbrances:
1. Copies of any unrecorded liens or encumbrances against the property;
2. A title report showing:
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a. An effective date not more than 30 days before Department receipt. The Department
may request that the applicant update the title report so that it is not more than 30 days
old when the public report is issued;
b. A legal description based upon a recorded map, condominium or timeshare
declaration. Metes and bounds legal descriptions shall be used only for membership
camping application title reports;
c. The applicant's interest in the property;
d. The name and telephone number of the person who prepared the title report;
e. A requirement page, if applicable; and
f. The following statement after the title exceptions: "There are no further matters of
record affecting the land."
3. Legible copies of all recorded and unrecorded documents reflected by the title report, or known
to applicant, such as restrictions, easements, liens, encumbrances, trust agreements, options,
and maps.
R4-28-A1217. ADEQ Approval
The applicant shall obtain subdivision approval from ADEQ or its designee.
R4-28-A1218. Property Registrations in Other Jurisdictions
The applicant shall provide a list of the jurisdictions where a property registration was filed with or
accepted by another department of real estate or similar regulatory agency.
R4-28-A1219. Condominium Developments
The applicant shall provide the following information about condominium developments:
1. A copy of the recorded condominium declaration, map, and amendments in effect, and
2. An opinion letter from an attorney licensed to practice in Arizona, stating that the condominium
plat and declaration of condominium are in compliance with the requirements of A.R.S. §§ 331215 and 33-1219.
R4-28-A1220. Foreign Developments
A. Unless exempt pursuant to A.R.S. § 32-2181.02, an applicant shall ensure that any development
located outside the state that is advertised, promoted, or sold within the state complies with all Arizona
laws and rules as if the land was located in the state.
B. Any law or rule that is specific to Arizona may be waived by the Department, or the Department may
request and accept the domicile state or country's equivalent form of documentation.
C. The applicant shall provide evidence that the domicile state or country has authorized the sale of lots
and that the development is in compliance and good standing. If the domicile state or country issues a
public report or equivalent, the application shall include the report.
R4-28-A1221. Cemetery Developments
The applicant shall provide the following information about cemetery developments:
1. A statement that there are no liens on the cemetery property,
2. An accounting of the endowment care fund for an existing perpetual care cemetery, and
3. A financial statement of the applicant.
R4-28-A1222. Membership Camping Developments
The applicant shall provide the following information about a membership camping development:
1. If the interest of the operator is evidenced by a lease, license, franchise, or a reciprocal
agreement, a copy of the document and any amendments;
2. A description of any lakes or streams available for recreational use; and
3. A description of any exchange network and the responsibilities, obligations, and rights of the
operator and purchaser, and copies of all exchange network documents.
R4-28-A1223. Affidavit
The applicant shall sign an affidavit attesting that the information found in the application is true and
correct.
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PART B. GENERAL INFORMATION
R4-28-B1201. Expedited Registration For Improved Subdivision Lots and Unsubdivided Lands
A. A developer may use the expedited public report registration by preparing the public report and
submitting the appropriate application documents and fees established in A.R.S. §§ 32-2183(B) or 322195.03(B) to the Department. The Department shall assign a registration number to each application
and verify the following:
1. The correct application form has been used and is two-hole punched at the top in standard
placement. The application is placed on a two-prong AACO-type fastener in a file folder and
delivered to the Department in an expanding file folder. Maps may be left off the fastener, folded,
and placed in the expanding file. The application shall include:
a. The Expedited Registration Request letter signed by the applicant; and
b. The completed Department checklist for administrative completeness which indicates
inclusion of the documents required by A.R.S. Title 32, Chapter 20, Article 4 and 4 A.A.C.
28, Article 12, Part A.
2. The filing fees have been included with the application;
3. All application questions have been answered;
4. The application signature page has been properly executed;
5. All required documents have been submitted; and
6. A complete and accurate public report in the Department's published format on a computer
diskette, formatted in a word processing program compatible with the Department's current
computer operating system and word processing software, has been submitted and all exhibits
used for disclosure have been included on the diskette. (The developer may obtain a diskette
containing the public report template from the Department upon request.)
B. The Department may allow the applicant to correct a deficiency within the administrative completeness
time-frame provided in A.R.S. §§ 32-2183(B) and 32-2195.03(B), in which case the overall 15 business
day limitation is suspended until the applicant corrects the deficiency.
R4-28-B1202. Conditional Sales Exemption
A. Any developer applying for a special order of exemption authorizing the offer for sale of a subdivision
lot or unsubdivided land before issuance of a public report shall provide the following information to the
Department:
1. The completed and executed Petition for Conditional Sales Exemption;
2. The completed and executed subdivision or unsubdivided land application for a public report;
3. The purchase contract containing all required contract disclosures and the Conditional Sales
Addendum;
4. A current title report showing the ownership interest of the developer and acceptable condition
of title;
5. A copy of the recorded development map, or if not recorded, a copy of the unrecorded map;
6. A copy of the Condominium Declaration, if applicable;
7. A Certificate of Assured Water Supply, or a letter from the ADWR or other evidence that the
property is located in an area designated as having an assured water supply, if the property is
located in a groundwater active management area;
8. A water adequacy report from the ADWR or evidence that the property is located in an area
designated as having an adequate water supply, if the property is located outside of a
groundwater active management area; and
9. Any other information revealed necessary after preliminary review.
B. The conditional sales exemption shall expire upon issuance or denial of the public report, or upon
issuance of an order to summarily suspend sales, to cease and desist, or a voluntary suspension of sales
by the developer or owner.
R4-28-B1203. Material Change; Public Report Amendments
A. The developer shall notify the Department of all material changes in the information required by A.R.S.
Title 32, Chapter 20, Articles 4, 7, 9, and 10, or 4 A.A.C. 28, Article 12, Part A.

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B. According to material changes reported in subsection (A), the Department may require the developer
to amend the public report.
C. Completion Date Extension.
1. A developer may apply to the Department for an amendment to a public report to extend the
completion date of any improvement by providing an affidavit from the developer attesting that
each purchaser, owner, and the city or county officials responsible for improvements were
provided written notice of the completion status of the improvement, including a list of all people
who were provided notice.
2. The Department may deny the application to extend the completion date beyond the first
extension if a purchaser, owner, or city or county official opposes issuance of an amended public
report to extend a completion date.
3. If an extension is denied, the developer shall provide the Department with a written agreement
to suspend sales until the improvement is complete or the Department may issue a summary
suspension order as provided in A.R.S. § 32-2157(B).
D. To amend a public report, a developer shall submit payment of the applicable amendment fee and the
following information:
1. The name and registration number of the development;
2. The name and signature of the developer;
3. A list of the changes to the development and sales offering or in the information previously
provided to the Department;
4. Status of sales as prescribed in subsections (C) and (E); and
5. A purchase contract addendum, to be signed and dated by both seller and purchaser,
acknowledging that the sale is conditioned upon issuance of the amended public report and
purchaser's receipt and acceptance of the amended public report.
E. Suspension of sales.
1. If necessary for the protection of purchasers, the Department may suspend approval to sell or
lease pending amendment of the report.
2. In lieu of issuing a suspension order under A.R.S. § 32-2157, the Department may accept a
developer's written agreement to suspend sales until the amended public report has been issued
by the Department.
F. If the Department determines that a suspension of sales is not necessary for the protection of
purchasers and approves the proposed disclosure of the change, sales may continue if the prospective
purchaser is provided a copy of the current public report and disclosure of all changes before signing a
contract. Completion of sales is conditioned upon the developer obtaining and delivering to each
purchaser under contract the amended public report.
G. Upon obtaining the amended report, the developer shall provide a copy to prospective purchasers in
place of the earlier public report and obtain a receipt for the amended public report.
H. If an application to amend a public report is denied, the Department shall notify the developer in writing
of the statutory basis for the denial and of the developer's right to a fair hearing.
R4-28-B1204. Cemetery Notice; Amendments
A change to information required pursuant to the provisions of Title 32, Chapter 20, Article 6, R4-28301(A), or any other Section, requires amendment of the notice filed pursuant to A.R.S. 32-2194.01.
R4-28-B1205. Contiguous Parcels
Except for lots in a platted subdivision, if two or more contiguous parcels of land are acquired by a single
owner, the Department shall classify the lots as a single parcel for purposes of subdivision laws.
R4-28-B1206. Filing with HUD
If the subdivider requests that a subdivision public report be certified by the Department for filing with
HUD, the subdivider shall comply with the terms, conditions, and requirements of the HUD certification
agreement.

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R4-28-B1207. Subsequent Owner
A. Except as provided in A.R.S. § 32-2181.02, any developer who is a successor in interest to six or more
lots within a subdivision on which the Department previously issued a public report shall file an application
for and obtain a new public report before offering or selling any lot.
B. Any developer who is a successor in interest to six or more parcels within an unsubdivided land
development on which the Department previously issued a public report shall file an application for and
obtain a new public report before offering or selling any parcel.
C. Any developer who is a successor in interest to 12 or more time-share intervals within a time-share
project on which the Department previously issued a public report shall file an application for and obtain a
new public report, before offering or selling any interval.
D. The Department shall not issue a new public report to a subsequent owner of a development if the
previous developer failed to complete proposed improvements in accordance with estimated completion
dates specified in the previously issued public report until one of the following occurs:
1. The subsequent owner makes financial arrangements, as described in R4-28-A1211, in favor
of the local governmental authority and for the benefit of purchaser, securing the owner's promise
to complete the previously proposed improvements by a designated date; or
2. The subsequent owner becomes obligated to place all sales funds in a neutral escrow
depository until the Department is furnished satisfactory evidence that all proposed improvements
have been completed or accepted by the city or county; or
3. Permission is obtained by all previous purchasers in the development for completion of the
proposed improvements by the new designated date for completion; or
4. The subsequent owner establishes to the satisfaction of the Department that adequate
financial arrangements have been made to assure completion of the proposed improvements by
the new designated date for completion.
E. A developer who is a new owner of property that is the subject of a pending application for a public
report shall not replace or be substituted for the applicant of the pending application.
R4-28-B1208. Public Report Correction
If the public report contains an error, the Department shall correct the report at its own expense.
Additional or changed information that was known to the developer before issuance of the report is not an
error. The Department shall not correct the public report after it has been in effect for 10 days. After 10
days, the developer shall change the report through the development amendment process, established in
R4-28-B1203, with payment of the applicable amendment fee.
R4-28-B1209. Options; Blanket Encumbrances; Releases
A. The Department shall not issue or amend a public report for any lot held under option or subject to a
blanket encumbrance if a condition precedent to the optionee's right to acquire the lot or to release from
the blanket encumbrance shows that the lot shall:
1. Be acquired or released in a particular sequence,
2. Be acquired or released only after one or more additional lots have been acquired or released,
or
3. Not be released if the encumbrance is in default because of a cross-default provision contained
in the encumbrance,
B. The developer may require payment of a premium to permit the acquisition or release of the lot.
C. When a blanket encumbrance clouds title to a development, the developer shall place a written
statement from the holder of the blanket encumbrance in the public report application, quoting the
provisions that enable a buyer to acquire title to a lot, free of the blanket encumbrance.
R4-28-B1210. Earnest Money
The developer shall deposit earnest money and down payments in a neutral depository if:
1. The seller is in bankruptcy;
2. The sale is conditional pursuant to R4-28-B1202; or
3. The Department perceives a risk to the buyer.

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R4-28-B1211. Recordkeeping
If real property in a development is sold or leased by a developer without the services of a listing or
selling broker, the developer shall keep all records as required by A.R.S. § 32-2151.01(A) and (C).

ARTICLE 13 ADMINISTRATIVE PROCEDURES
R4-28-1302. Service of Pleadings Subsequent to Complaint and Notice
A. Service of pleadings subsequent to complaint and notice of hearing shall be made by personal service
or by mail to the last known address of record of the party or the party's counsel. If service is made by
mail, response time shall be increased by five days. Service by mail is complete upon mailing.
B. Any person filing a pleading or brief with the Department shall also file with the Attorney General.
R4-28-1303. Information Obtained in an Investigation
A. The Department shall ensure that information and documents in open audits and investigations remain
confidential. Officers and employees of the Department shall not make confidential information or
documents available to anyone other than the Attorney General or the Attorney General's representative,
or authorized employees of the Department, unless the Commissioner authorizes disclosure of the
information or production of documents as being in the public interest.
B. Upon request, the Department shall disclose the existence of and make available for review audit and
investigative files that were closed within five years of the request for the information, subject to redaction
of confidential or privileged information such as date of birth, social security number, bank and trust
account numbers, home address and telephone number of active-status licensees, criminal history
reports, attorney-client privileged communications, work product, and information regarding settlement
negotiations.
R4-28-1304. Response; Default
A. A response shall specifically admit, deny, or state that the party does not have, or is unable to obtain,
sufficient information to admit or deny each allegation in the complaint. A statement of a lack of
information shall have the effect of a denial. Any allegation not denied is deemed to be admitted. When a
party intends in good faith to deny only a part of an allegation, the party shall admit so much of it as is
true and shall deny the remainder.
B. If the party fails to file a response or after being served notice, fails to appear at a hearing within the
time provided by the statute under which the hearing is commenced, the Department may file an Affidavit
of Default against the party, and proceed to take action against the party based upon the allegations of
the charges. This action may be taken before the hearing date established in the Notice of Hearing. The
party may file a motion to vacate the default and any action taken by the Commissioner within 15 days
after receiving a copy of the default and the action or order by the Commissioner. For good cause, the
Commissioner may vacate a default and any action taken and reschedule a hearing.
C. Every response filed pursuant to this Section shall be signed by the filing party or by at least one
attorney, in the attorney's individual name, who represents the party, and shall be verified.
R4-28-1305. Notice of Appearance of Counsel
A. A party may participate in the party's own behalf or be represented by a member of the State Bar of
Arizona.
B. Any person intending to appear at a contested case hearing or appealable agency action as counsel or
representative of a party shall file a Notice of Appearance which shall advise the Department of the
person's intent to appear on behalf of a party. The notice shall be filed with the Office of Administrative
Hearings and served on all parties and shall contain:
1. The title of the case,
2. The name of the agency ordering the hearing,
3. The current address and telephone number of the person appearing, and
4. The name of the party for whom the person is appearing.
R4-28-1310. Rehearing or Review of Decision; Response; Decision
A. Unless otherwise provided by statute or rule, any party to a hearing before the Office of Administrative
Hearings who is aggrieved by a decision rendered in a case may, pursuant to A.R.S. § 41-1092.09, file
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with the Commissioner a written motion for rehearing or review of the decision. The motion shall specify
the particular grounds for rehearing or review. The moving party shall serve copies upon all other parties.
A motion for rehearing or review under this Section may be amended at any time before the
Commissioner rules upon the motion.
B. A rehearing or review of the decision may be granted for any one of the following causes that
materially affect the moving party's rights:
1. Irregularity in the proceedings or any order or abuse of discretion by the administrative law
judge that deprived a party of a fair hearing;
2. Misconduct by the Department, administrative law judge, or the prevailing party;
3. Accident or surprise that could not have been prevented by ordinary prudence;
4. Newly discovered material evidence that could not with reasonable diligence have been
discovered and produced at the original hearing;
5. Excessive or insufficient penalties;
6. Error in the admission or rejection of evidence or other errors of law occurring during the
proceeding;
7. That the findings of fact or decision is arbitrary, capricious, or an abuse of discretion;
8. That the findings of fact or decision is not supported by the evidence or is contrary to law.
C. Presenting specific grounds for rehearing or review, affidavits and relief sought.
1. Each party filing a motion for rehearing or review shall specify in the motion which of the
grounds listed in subsection (B) the motion is based upon and shall set forth specific facts and
law in support of the rehearing or review. The party may cite relevant portions of testimony by
reference to pages or lines of the reporter's transcript of the hearing or to the date and time range
of the Office of Administrative Hearings audio record, and may cite hearing exhibits by reference
to the exhibit number.
2. When a party files a motion for rehearing or review based upon an affidavit, the person shall
attach the affidavit to the motion before filing the motion unless leave for later filing of an affidavit
is granted by the Commissioner. The leave may be granted ex parte.
3. Each party filing a motion for rehearing or review shall specify the specific relief sought by the
motion, such as a different decision or penalty, a new hearing, a dismissal of the complaint, or
other relief. A party may seek multiple forms of relief, in the alternative.
D. Any party may file a written response to the motion. An affidavit may be attached to and filed with the
response and shall not be later filed unless leave for later filing of affidavits is granted by the
Commissioner. The original response shall be filed with the Department pursuant to R4-28-102, within 15
days after the date the motion for rehearing or review is filed, and a copy shall be served upon all other
parties to the hearing.
E. Within 30 days after a decision is rendered, the Commissioner may, on the Commissioner's own
initiative, order a rehearing or review of a decision for any reason for which a motion for rehearing or
review might have been granted. The Commissioner shall specify the grounds for rehearing or review in
the order.
F. Upon review of a motion for rehearing or review of the decision, and any response, the Commissioner
shall issue a ruling granting or denying the motion. If granted, the Commissioner may modify the decision
or grant a rehearing. An order granting a rehearing shall specify with particularity the grounds on which
the rehearing is granted, and the rehearing shall cover only those matters specified. All parties to the
hearing may participate as parties at any rehearing.
R4-28-1313. Correction of Clerical Mistakes
Clerical mistakes in opinions, orders, rulings, any process issued by the Department, or other parts of the
record, and errors arising from oversight or omission, may be corrected by the administrative law judge
before transmission of the Department hearing file to the Commissioner, or by the Commissioner after
transmission of the file, either upon the initiative of the administrative law judge or Commissioner, or upon
motion of any party.

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SUBSTANTIVE POLICY STATEMENTS
For updated versions of the Substantive Policy Statements please refer to our website at www.azre.gov
or follow this link Substantive Policy Statements
No. 2017.01 Unlicensed Assistants
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties, you may petition the
agency under ARS 41- 1033 for a review of the statement.
Description of Practice/Procedure: In looking at the issue of unlicensed assistants, various aspects
must be considered, including what activities the individual will perform and how the individual is paid.
Definition: An Unlicensed Assistant is an unlicensed individual hired by an Arizona licensed real estate
broker or salesperson as an assistant, who is not engaging in any activity for which a real estate license
is required.
Definition: Compensation means any fee, commission, salary, money or other valuable consideration for
services rendered or to be rendered as well as the promise of consideration whether contingent or not
(A.R.S. § 32-2101(16)).
An unlicensed assistant cannot be compensated on any basis that relies on the ultimate sale or closing of
a property. The employing broker or designated broker is responsible for addressing in its written policies
and procedures who is responsible for hiring and compensating unlicensed assistants. The employing
broker is responsible for all activities of licensed individuals within the brokerage pursuant to Arizona
Revised Statutes and Rule.
All inclusions of the unlicensed assistant in advertising or marketing must indicate the individual as being
“unlicensed” (A.R.S. § 32-2165(A)).
An unlicensed assistant may:
Under the direct supervision of an Arizona licensee, perform the following tasks, which include, but are
not limited to:
o
Personal errands for the licensee
o
Clerical/administrative tasks including filing, copying, mailing, scanning, answering
phones, forwarding calls or transcribing callers’ information for licensee
o
Using technology as a tool to complete tasks assigned by a licensee, which are not
activities otherwise requiring a real estate license
o
Preparing marketing materials approved by the Designated Broker
o
Delivering documents
o
Assist at an open house with a licensee present
o
Set or confirm appointments for:
•
A licensee to list or show property
•
A buyer with a loan officer
•
A property inspector to inspect a home
•
A repair/maintenance person to perform repairs/maintenance
•
An appraiser to appraise property
o
Transmitting only instructions or information to clients, contractors, inspectors,
appraisers and maintenance/repair people as completed and dictated by a licensee.
o
Unlocking a home for a licensee so that the licensee can show a client the property or
preview the property (No discussion about the property).
An unlicensed assistant shall not perform the following activities:
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o
o
o
o
o
o
o
o

o

Originate documents
Perform a walk-through inspection or Tenant Vacate Inspection
Provide advice, pricing, or opinions of value to a consumer
Provide advice or negotiate with anyone regarding a property or transaction
Assist in the preparation of documents with a consumer
Hold/host an open house without a licensee being present
Collect or offers, attempts or agrees to collect rent for the use of real estate
Assist or direct in the procuring of prospects calculated to result in the sale, exchange,
leasing or renting of real estate pursuant to A.R.S. 32-2101(48)(i) unless exempt under
A.R.S. 32-2121(A)(10). Be advised that the exemption in A.R.S. 32-2121(A)(10) is very
fact specific and limited in scope.
Attend closing with a consumer without a licensee being present

An unlicensed assistant may transfer monies or be a signatory on a property management trust
account only when the unlicensed assistant:
o
Is in the direct employ of the broker, and
o
Is a bona fide officer, member, principal or employee of the property management firm
pursuant to A.R.S. § 32-2174(C) and employing broker pursuant to A.R.S. § 32-2101(24).
An unlicensed assistant is otherwise not permitted to withdraw monies from the broker’s trust
account.
Pursuant to A.R.S. 32-2165(B) A person who performs acts that require a license under this chapter,
other than a broker’s or salesperson’s license, without being licensed as prescribed by this chapter is
guilty of a class 5 felony.
Authority: A.R.S. § 32-2101(46) defines the activities of a real estate broker for which licensure is
required pursuant to A.R.S. §§ 32-2122, 32-2121, 32-2151.01(B), 32-2174(C). See also
A.A.C.
R4-28-1103. Policy Program: Enforcement
Effective Date: Revised April 3, 2000; Revised & Renumbered 5/28/04; Renumbered 4/01/05; Revised &
Renumbered 6/9/2017.
No. 2016.01 Acceptable Forms of Payment
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41- 1033 for a review of the statement.
Description of Practice/Procedure:
The Department will only accept payment for fees and for any other purposes when made by credit card,
check, or money order.
Acceptable checks include pre-printed personal or business account checks or drafts, either in-state or
out-of-state. Two-party checks, counter checks or any check not pre- printed with the name and address
of the account holder, the name of the subject financial institution and the account number are considered
unacceptable forms of payment.
Payment of a civil penalty shall be by credit card, money order, certified check, or cashier’s check.
If an individual or entity has an outstanding “bad check,” no further checks or payment of any other kind
for any purpose will be accepted by the Department from that individual or entity until the outstanding
check is redeemed, using a credit card, cashier’s check, money order, or certified check.
The Department will accept one form of payment per transaction.
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Authority: A.R.S. §§ 32-2125.01, -2129, -2130, -2186, -2194.02, -2195.02, -2196, -2197.05
and -2198.09 authorize the Commissioner to assess fees and prescribe the amounts to be charged.
A.R.S. § 35-142(I) authorizes state agency acceptance of credit card payments pursuant to § 35-315.
Policy Program: Commissioner’s Office
Effective Date: June 18, 1999; Revised & Renumbered May 28, 2004; Revised &
Renumbered April 1, 2005; Revised & Renumbered February 8, 2008; Revised & Renumbered
March 29, 2016.
No. 2015.01 Short Title: Instructor Professional Development Requirements
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure:
This Substantive Policy Statement is intended to inform the regulated real estate education industry of the
Department’s interpretation and implementation of the education statutes and rules under the
Department’s original jurisdiction, through the establishment of real estate instructor professional
development requirements.
CONTENT INSTRUCTOR PROFESSIONAL DEVELOPMENT REQUIREMENTS
The Law: In addition to instructor qualifications required pursuant to A.A.C. R4-28-404(C), the
Department has established content instructor professional development requirements. Specifically: “The
commissioner may determine… appropriate professional qualifications for approving instructors to teach
individual educational courses.” A.R.S. § 32-2135(E); and “The commissioner may withdraw or deny
certification or approval of… real estate instructors for… failing to attend any continuing education course
required by the commissioner.” A.R.S. § 32-2135(C)(5).
Requirements and Administration:
1.

For an Instructor Applying for Individual Continuing Education Category Teaching Approval: Upon
an original or renewal instructor approval application, or during the instructor’s current four year
approval period, the applicant shall provide evidence to the Department of having attended any
combination of six hours of live classroom and/or distance learning Department-approved
continuing education (CE) courses, taken within the 48 months immediately preceding the date of
application, for each of the following seven CE categories in which the applicant wishes to be
approved to teach:
a.
b.
c.
d.
e.
f.
g.

2.

Agency Law
Contract Law
Commissioner’s Standards
Real Estate Legal Issues
Fair Housing
Disclosure
General Real Estate

For a Licensed Arizona Broker or Salesperson: As an alternative to paragraph 1 above, upon an
original or renewal instructor approval application, or during the instructor’s current approval

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period, a licensee applicant shall provide evidence to the Department of having renewed the
licensee’s Arizona broker’s or salesperson’s license twice within the 48 months immediately
preceding the date of application for each of the following seven CE categories in which the
applicant wishes to be approved to teach:
a.
b.
c.
d.
e.
f.
g.

Agency Law
Contract Law
Commissioner’s Standards
Real Estate Legal Issues
Fair Housing
Disclosure
General Real Estate

3.

For an Arizona Broker Applying for Approval to Teach a Prelicense Education Course: Upon an
original or renewal instructor approval application, or during the instructor’s current approval
period, the applicant shall provide evidence to the Department of having met the requirements of
either paragraph 1 or 2 above for all seven CE categories, and paragraph 5 for all three Broker
Management Clinic subject areas. A currently approved prelicense instructor who does not hold a
current broker’s license is grandfathered and may maintain the prelicense approval by meeting
the requirements of paragraph 1 above for all seven CE categories, and paragraph 5 for all three
Broker Management Clinic subject areas.

4.

For an Instructor Applying for Approval to Teach the 6-hour Contract Writing (“Boot Camp”):
Upon an original or renewal instructor approval application, or during the instructor’s current
approval period, the applicant shall provide evidence to the Department of having attended twelve
hours of Department-approved Contract Law courses, taken within the 48 months immediately
preceding the date of application. No more than six of the CE hours may be in distance learning.

5.

For an Arizona Broker Applying for Approval to Teach the Broker Management Clinic (“BMC”):
Upon an original or renewal instructor approval application, or during the instructor’s current
approval period, the applicant shall provide evidence to the Department of having attended two
different live classroom BMC courses for each of the following three CE subject areas in which
the applicant wishes to be approved to teach, within the 48 months immediately preceding the
date of application:
Courses
Hours
a.
Broker Management Clinic #1 – Statutes And Rules
2
6
b.
Broker Management Clinic #2 – Broker Policies
2
6
c.
Broker Management Clinic #3 – Supervision
2
6
Total: 6
18
CONTENT INSTRUCTOR DEVELOPMENT WORKSHOP (“CONTENT IDW”)
The Law: Pursuant to authority of the Department: “The commissioner may determine… appropriate
professional qualifications for approving instructors to teach individual educational courses.” A.R.S. § 322135(E); and “The commissioner may withdraw or deny certification or approval of… real estate
instructors for… failing to attend any continuing education course required by the commissioner.”
A.R.S. § 32-2135(C)(5).
Instructor Professional Development Requirements Page 3
Discontinuance of the Content IDW Program:
1.

The Department previously approved numerous Content IDW courses that were individually
designed and approved to satisfy twice their number of CE hours required for instructor approval
to teach in a specific CE or prelicense course area. Effective the date of this Substantive Policy,
the Content IDW Program is discontinued and no new Content IDW applications will be accepted
by the Department. Previously approved Content IDW courses will not be eligible for renewal and
will expire upon the course expiration date on the Department’s course approval system.

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2.

A three hour minimum Content IDW previously taken by an instructor applicant within the 48
months prior to the original or renewal application date, or during the instructor’s current approval
period, with evidence of attendance submitted to the Department, will be accepted as equal to
and qualifying for two of the regular CE courses in that category of instruction.
SKILLS INSTRUCTOR DEVELOPMENT WORKSHOP (“SKILLS IDW”)

The Law: “Beginning January 1, 2012, in the twenty-four months before application, each instructor
original or renewal applicant, other than a panelist, guest speaker, an attorney or out-of-state instructor,
shall attend at least a three hour professional seminar or workshop, approved by the department,
emphasizing instruction methods, techniques and skills.” A.R.S. § 32-2135(K).
Skills IDW Requirements & Administration:
1.

For Approval to Teach Prelicense or Continuing Education: Upon the original or renewal
instructor approval application, the applicant shall provide evidence to the Department of having
attended at least one live Department-approved 3-hour Skills IDW within the 24 months
immediately preceding the date of application.

2.

For Approval to Teach a Skills IDW: Upon an original or renewal instructor approval application,
or during the instructor’s current approval period, the applicant shall provide evidence to the
Department of having attended at least six hours of live Department-approved Skills IDW
course(s) within the 24 months immediately preceding the date of application.

Authority: A.R.S. § 32-2135 and A.A.C. R4-28-404.
Policy Program: Education
Effective Dates: March 20, 2015
No. 2013.01. Short Title: Multifamily Housing Records Retention
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure:
Per A.R.S. §32-2175 - A broker managing multifamily housing may designate an onsite leasing office as
an off-site storage location in this state for residential rental agreements, related residential rental
agreement documents and records of finder’s fees if the Department of Real Estate is notified in writing.
Off-site storage location may include a multifamily leasing office as well as electronic storage. If
electronic, then ADRE shall be notified of the physical location and records host as prescribed in SPS No.
2010.01 Electronic Records Storage.
Per A.R.S. §32-2151 trust account records shall not be maintained at an onsite leasing office.
The broker managing multifamily housing shall notify the department within 10 days of any change in
location of the off-site storage location.
Authority: A.R.S. §§32-2102, 32-2151, 32-2175
Policy Program: Multifamily Housing Records Retention
Effective Date: March 28, 2013

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No. 2012.01. Short Title: Broker Management Clinic Course/Instructor Requirements
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure:
The Arizona Department of Real Estate (Department) presents the following clarification of the
requirements for Broker Management Clinic (BMC) classes and instructors under the Department’s
original jurisdiction and as provided by amendments adopted by the 2012 Legislature. This legislation
provides that on and after January 1, 2013, each real estate Designated Broker (DB) and Delegated
Associate Broker (DAB) with duties authorized in writing pursuant to A.R.S. § 32-2151.01(G) to act on the
designated broker’s behalf to review and initial contracts or similar instruments, shall complete a BMC
consisting of nine (9) credit hours (three (3) courses of three (3) hours each). This brings the total renewal
credit hours required for these licensees to 30 per 24-month license period.
BMC COURSE STANDARDS AND GUIDELINES
The BMC shall be presented in three (3) different three (3) hour classes and may be delivered in either
live classroom or distance learning format. Each class shall be approved for three (3) hours of continuing
education credit in Commissioner’s Standards and may include/emphasize a specific real estate
discipline (specialty) as described below under BMC Specialty Option that includes the distinct Specialty
Name in the course title. To meet statutory requirements these three (3) classes shall be designed as
follows:
BMC #1- Statutes and Rules (Specialty Name) This class shall include the following topic areas:
Record keeping requirements
Trust fund accounts
Material disclosures
Other related statutes and rules

Contracts
Fiduciary duties
Employment agreements

Department Audits
Advertising and promotions
Department Investigations

BMC #2- Broker Policies (Specialty Name) This class shall include the following topic areas:
1. Broker Policy Development
2. Related Topics, including a minimum of one of the following three areas:
a. Establishment of broker policies (A.A.C. R4-28-1103
b. Practical application enforcing
c. Emphasis on those policies which ADRE has policies identified as common complaints/
violations to avoid
BMC #3- Supervision(Specialty Name) This class shall include the following topic areas:
1.
2.
3.
4.

Broker supervision
Broker responsibilities/legal obligations
Broker risk management
Other related topics

BMC Specialty Option A BMC course may include/emphasize a specific real estate discipline, or
disciplines, such as:
Residential resale
Timeshares
Other specific real estate issues

Business brokerage
Commercial real estate

Property management
New home sales

The Department will accept BMC course applications beginning August 1, 2012, to ensure the availability
of courses prior to the January 1, 2013 implementation date. Current BMC courses approved prior to
August 1, 2012, will terminate January 1, 2013.
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BMC COURSE INSTRUCTOR QUALIFICATIONS
A BMC course instructor applicant, original or renewal, may apply to be an instructor in any or all of the
classes that make up the Broker Management Clinic per Real Estate Instructor
Approval/Renewal/Change Application (Form ED-101). Current/existing BMC course instructors must
apply to instruct any or all of the new BMC classes, their existing certification will terminate January 1,
2013. The applicant shall:
a) Possess the appropriate subject area experience/expertise in the content areas required to be
included in the specific BMC class(es).
b) A current licensed Arizona Real Estate Broker for three (3) of the immediately preceding five (5)
years.
c) Have satisfactorily completed six separate 3-hour BMC courses (2 each of BMC #1, #2, and #3)
within the immediately preceding 48 months, or a 9-hour BMC instructor Development Workshop
(IDW) within the immediately preceding 24 months. (An instructor application submitted prior to
March 1, 2013 may petition the Commissioner to accept evidence of equivalent education if a 9hour BMC IDW or six (6) 3-hour BMCs were not available.)
REAL ESTATE BROKER LICENSING/RENEWAL REQUIREMENTS
Original broker license applicants who have not completed the licensing process prior to January 1, 2013,
shall take the nine (9) hour BMC course prior to becoming licensed brokers pursuant to A.R.S. § 322136(C).
Associate Brokers (AB) without the authority pursuant to A.R.S. § 32-2151.01(G) are not required to
complete a BMC course to meet the renewal requirements.
Designated Brokers subject to this legislation who complete the current BMC continuing education
requirements prior to January 1, 2013, are exempt pursuant to A.A.C. R4-28-402 (A) (9) and may renew
their license without meeting the new BMC course requirements.
DABs subject to this legislation who complete their current continuing education requirements prior to
January 1, 2013, are exempt pursuant to A.A.C. R4-28-402 (A) (9) and may renew their license without
meeting the new BMC course requirements.
Designated Brokers subject to this legislation who do not complete the current continuing education
requirements by January 1, 2013, must complete a nine (9) hour BMC course.
DABs subject to this legislation who do not complete the current continuing education requirements by
January 1, 2013, must complete a nine (9) hour BMC course.
An AB applying to become a DB on or after January 1, 2013, shall have completed a nine (9) hour BMC
course within the past 23 months.
An AB shall have completed a nine (9) hour BMC course within the past 23 months before acting under
the delegated authority pursuant to A.R.S. § 32-2151.01(G) on or after January 1, 2013.
Real Estate Salespersons and ABs who are delegated the authority to act as a temporary broker during a
designated broker’s temporary absence pursuant to A.R.S. § 32-2127(D) are not required to complete a
BMC course to meet the requirements of A.R.S. § 32-2136.
Licensees may take the three BMC classes in any order, and from any combination of approved schools
within any discipline, however all three classes must be completed for the current license period.
Authority: A.R.S. § 32-2102 provides that the Department of Real Estate, under the direction of the Real
Estate Commissioner, shall administer Title 32, Chapter 20. A.R.S. § 32-2130 specifies the educational
requirements for license renewal. A.R.S. § 32-2136 specifies the content of Broker Management Clinics.
Arizona Administrative Code R4-28-402(A)(9) specifies the requirements for course completion
Policy Program: Education
Effective Date: 8-1-2012

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No. 2010.03. Short Title: Real Estate School Audit Declaration
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure:
STATEMENT OF PURPOSE AND SCOPE
This Substantive Policy Statement is intended to inform the regulated real estate education industry of the
Department’s current enforcement approach to and opinion of the requirements of education statutes and
rules under the Department’s original jurisdiction, by establishing a biennial reporting requirement by
schools, to assist the Department in the regulation of real estate schools. The Real Estate School Audit
Declaration will collect important information about real estate schools specific to school compliance with
education statutes and rules. The School Audit Declaration is calculated to reduce the audit burden of the
Department and to gather more reliable and valuable information.
REAL ESTATE SCHOOL AUDIT DECLARATION
School Audit Declaration: A Real Estate School Audit Declaration shall be completed by each school that
holds Department approval to teach real estate. The School Audit Declaration shall:
1. Be completed by the school administrator, in an online form provided by the Department, not
earlier than December 15, 2010 and not later than January 31, 2011, and shall be re-submitted
every other year thereafter between December 15 and January 31.
2. Be required for every approved real estate school – prelicensure, continuing education and
distance learning.
3. Be signed by the school administrator, attesting to the reliability and truthfulness of the
information provided.
4. Contain audit questions concerning the operations and activities of the school, including:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.

Appropriate content of approved courses.
Courses where content is no longer current or is substantially changed.
Courses requiring revision and approval resubmission.
Reasonable supervision of the school and instructors.
Assignment of competent instructors.
Proper certification of student attendance or performance.
Teaching of unapproved courses.
Course outlines which accurately reflect the content taught.
Unapproved courses being advertised as “pending.”
Adherence to the 50-minute hour for every hour of course credit issued by the school.
Advertising which contains no misleading or inaccurate statistics or which is otherwise
deceptive.

Authority: A.R.S. §§ 32-2101, 32-2108, 32-2135 and 32-2153, and A.A.C. §§ R4-28-101, R4-28-401,
R4-28-402 and R4-28-404.
Policy Program: Education/Regulation/Enforcement
Effective Date: 11-1-2010
No. 2010.02. Short Title: Distance Learning Guidelines
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
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in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure:
STATEMENT OF PURPOSE AND SCOPE
This Substantive Policy Statement is intended to inform the regulated real estate education industry of the
Department’s current approach to and opinion of the requirements of education statutes and rules under
the Department’s original jurisdiction, by establishing sensible distance learning standards, guidelines and
parameters that are based on the Department’s interpretation and application of the education statutes
and rules. “Distance Learning” applies solely to the delivery of Continuing Education courses.
Course Approval: In facilitating the original approval and renewal of courses:
1.

2.

3.

4.
5.

Prior to Department approval of a course, the real estate school shall provide access to the
Department to view and evaluate the proposed course, in the manner that the course is proposed
by the school to be delivered. The school shall additionally permit access to the Department to
view and evaluate a currently-approved course, as required.
All real estate course content, including laws, administrative code, practices, policies, codes of
ethics, customs and standards of care, shall be applicable to Arizona real estate practice. No
course shall include content based on laws, practices, policies, codes of ethics or standards of
care that have no practical or meaningful application to Arizona real estate.
For each original course approval submission to the Department, the school shall identify the
Department-approved instructor who has authored the course and that the course meets all
Department requirements. The approved instructor must meet applicable instructor qualifications
established for instructors of live classroom course delivery, including course content
competence.
Each Distance Learning Course must meet the requirements for the applicable course credit
category before being approved for continuing education credit in that category.
A continuing education distance learning course approval shall not be issued later than 90 days
after filing with the Department. If approval is not granted within 90 days, the course shall be
automatically approved on a provisional basis for 180 days, unless the Department otherwise
notifies the school of specific deficiencies or unfulfilled requirements for the course submission.

Course Administration: The following are required in the school administration of distance learning
courses:
Course Timing Requirements
1.

2.
3.

The 50-minute-per-credit-hour rule shall be enforced for each course. For example, a 3-credithour course must incorporate a requirement that the student log a total of at least 150 minutes to
complete the course. Each school must have the ability to measure the amount of time spent by
the student in the school’s course, and enforcement of the 50-minute-per-credit-hour requirement
shall be subject to Department audit.
A course completion certificate may be issued only after student satisfaction of the 50-minute-percredit-hour requirement for the course.
Each 3-hour segment of a course shall be divided into five or more timed divisions (i.e.,
“modules”) for the purpose of course delivery. Each module shall be timed such that the student
may not proceed in the course until the minimum time for the module has elapsed. The sum of
the minimum times of the modules for a 3-hour course, for example, will equal 150 minutes
Course Quizzes and Exam

1.
2.

3.

Course delivery must include interactivity, and course performance shall be measured by a
diagnostic assessment in the form of quizzes and exams.
Each course module shall include a quiz. The student shall achieve a minimum passing score of
80% before proceeding in the course. The difficulty of the quiz shall be reflective of the content
presented in that module.
Each course shall include a final exam. The student shall achieve a passing score of at least 80%

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4.

5.

on the final exam before completing the course and being awarded a course completion
certificate. The difficulty of the exam shall be reflective of the content presented in the course.
Each module shall contain a minimum of 5 instances of interactivity, which may be achieved via
multiple choice, true-false, fill-in-the-blank, matching, prioritizing, etc., at the discretion of the
author. In addition, each module shall contain a minimum of 5 unique end-of-module multiple
choice quiz questions with only one correct/best answer.
The course final exam shall have a minimum of 25 multiple-choice questions with only one
correct/best answer. If an end-of-module quiz question is repeated in a final exam retake, the
order of the exam questions shall be randomly reselected and/or any repeated questions shall
have the answers reordered.
Miscellaneous

1.

2.

3.

4.

Each course shall include the means for the student to attest to the identity of the student and to
provide the student’s Arizona real estate license number, before issuance of the course
completion certificate.
Each school shall include with each course approval filing the school’s plan for dealing with
possible hardware and software failure. The plan shall include appropriate contact information on
the school’s website and/or within the course.
The school administrator shall insure that any instructor who is represented as the course author
is a Department-approved instructor in the applicable category and is competent to field content
questions regarding the course.
The business hours for contacting the school shall be easily available through the school’s
website and/or within the course.

Application of Provisions: The above provisions apply to every original and renewal application for course
approval.
Authority: A.R.S. §§ 32-2101, 32-2108, 32-2130, 32-2135 and 32-2153, and A.A.C. §§ R4-28-101, R428-401, R4-28-402 and R4-28-404.
Policy Program: Education/Regulation
Effective Date: 11-1--2010 for original course approval applications; Revised 11-2-2010
No. 2010.01. Short Title: Guidance for using Electronic Real Estate Transaction Management
and/or Document Storage Programs
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: Designated brokers may implement a Transaction Management
(TM) program for internal standardization of document storage, so long as the document storage program
adheres to the guidelines mandated by the Arizona Revised Statutes (“A.R.S.” or “statutes”) and the
Arizona Administrative Code Rules (“A.A.C. R” or “rules”) applicable to the Arizona Department of Real
Estate (“Department” or ADRE).
Understanding there are several computer based TM and/or document storage programs (“TM system” or
“electronic storage system”), this advisory provides guidance and outlines the responsibilities of brokers
who are using or intend to use any electronic record program. This advisory also provides guidance to
brokers using electronic record programs who have signed or intend to sign the Department’s User
Agreement, which provides the Department access to their electronic storage systems.
Electronic Record Keeping:
1.

Backing up records: Transaction and employment records required to be maintained pursuant
to statute or rule, must be backed-up (duplicated and stored in a secure, offsite location) in a

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manner allowing restoration in the event electronic data maintained at the principal place of
business is destroyed.
2.

Production of records: Records must be reproducible for the Department, at the broker’s
expense, in a legible, paper form (“hard copy”) upon the request of the Commissioner, or the
Commissioner’s representative, for auditing, inspection, or investigation purposes. Brokers who
maintain electronic records in a computer based TM and/or document storage program may
provide the Department with electronic access to records, unless a hard copy is specifically
requested by the Department.

3.

Electronic records maintained in an electronic storage system should be legible, exact duplicates
of the original documents.

4.

Maintenance of a log: Brokers using web based TM and/or document storage programs shall
maintain a log in a chronological or other systematic manner that lists each real estate purchase
contract or lease agreement, and identifies the file in which these documents are maintained. If
the web based TM and/or document storage program maintains this log or list electronically, it
should be made easily accessible upon request by the Commissioner or the Commissioner’s
representatives. If the web based TM and/or document storage program is not capable of
maintaining this log or list electronically, the broker shall maintain a separate list or log in either
written or electronic form and shall make it available to the Commissioner or the Commissioner’s
representative upon request.

5.

Notification requirements: If the file servers containing a broker’s web based TM and/or
document storage program are directly or indirectly owned by the broker, the broker shall inform
the Commissioner in writing of the location of these file servers. If the file servers containing a
broker’s web based TM and/or document storage program are not directly or indirectly owned by
the broker, the broker shall inform the Commissioner in writing of the legal address and name of
the entity responsible for storing such records. The broker may be required to show evidence that
the broker’s electronic records are backed-up in accordance with this SPS, and SPS 2005.06
addressing “Electronic Record Keeping”:
a. ADRE Online Review/Audit Option: A broker using a web based TM and/or document
storage program may opt to sign the Department’s User Agreement and provide the
Department with direct access to his/her electronic storage system. Providing the
Department access to brokers’ electronic storage systems is intended to enable efficient,
streamlined exchanges of information with the Department, increase efficiency within the
brokerage, and assist in ensuring compliance among real estate salespersons and
associate brokers licensed to brokers. This capability is available using a web based TM
and/or document storage program if a broker complies with the following requirements:
(1) the broker must sign a User Agreement with ADRE allowing ADRE internet access to
all required documents; (2) the broker must be able to produce the required documents
and files in hard copy format if hard copies of documents are specifically requested by
the Commissioner or the Commissioner's representative; and (3) the broker must sign a
guarantee that the documents and files will be maintained for the mandatory time frames
set forth in the relevant statutes and rules including, but not limited to, A.R.S. §§ 322151.01, 32-2153(A)(17) and 32-2175.
b. The Commissioner’s access to broker’s files shall be used for:
i. Preliminary review/research of consumer complaints against brokers and
salespersons;
ii. Routine audits or audit reviews of broker files to ensure compliance with any
requirements in the relevant statutes and rules, including but not limited to
ensuring that brokers properly maintain documents in a timely manner; and
iii. Any other purposes the Commissioner deems necessary to protect Arizona
consumers.

Electronic Signature
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1.

A broker’s statutory review of contracts and agreements maintained on an electronic TM and/or
document storage system may be recorded through a dated secure electronic signature in
compliance with A.R.S. § 44-7031. The TM and/or document system must have a means of
demonstrating, in accordance with A.R.S. §§ 44-7032 thru 44-7034 as applicable, that when the
signature was made, the signature was:
a. Unique to the person using it;
b. Capable of verification;
c.

Under the sole control of the person using it; and

d. Linked to the electronic record it relates to in such a manner that if the record were
changed the electronic signature would be invalidated;
2.

Electronic review of any document is permitted in lieu of actual initials on a document, providing
that such electronic review is recorded in an unalterable history or log file.

3.

The broker must enforce a written supervision policy requiring personal computer security that, at
a minimum, requires each person with electronic signature authority and capability to lock or sign
off his/her computer every time he/she walks away from the computer.

4.

The broker must have a backup system defining how and when contracts and agreements would
be reviewed in situations where the broker’s computers become inaccessible for an extended
period of time.

5.

The electronic TM and/or document storage system must have the ability to create a secure
history log of all activity for electronic signatures or broker review which can be reviewed by
Department auditors and investigators.

Authority: A.R.S. §§ 32-2108, 32-2151, 32-2151.01, 32-2151.02, 32-2153, 32-2175, and A.A.C. R4-28701, R4-28-802, R4-28-803, R4-28-804, R4-28-805, R4-28-1101, R4-28-1102, R4-28-1103, R4-28-1303.
Policy Program: Regulation
Effective Date: 4-8-2010
No. 2008.06 rev. Short Title: Preventing Mortgage Fraud through Disclosure
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure:
1.

This policy statement applies to real estate transactions with financing.

2.

The Department considers a conviction under A.R.S. § 13-2320 to warrant disciplinary action
under A.R.S. § 32-2153(B). The Department recommends that a licensee who provides a
premium, credit, or rebate in a real estate transaction disclose the premium, credit, or rebate to all
parties in the transaction, including the lender and third-party service providers, such as
appraisers, in the purchase agreement and the HUD-1 statement (or other writing if no HUD-1 is
required).

3.

A licensee is in violation of Title 32 Chapter 20 and AAC Title 4 Chapter 28 if:
a. The licensee gives a premium, credit or rebate or otherwise pays an individual and is
convicted of A.R.S. § 13-2320 (Residential Mortgage Fraud).
b. The licensee gives a credit, rebate, premium or otherwise pays an individual in violation
of 12 U.S.C. § 2607 et seq. (RESPA’s prohibitions against kickbacks, fee splitting, and

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unearned fees), Fannie Mae, Freddie Mac, FHA, VA, other federal and state
requirements.
Authority: A.R.S. §§ 32-2151.01(A), 32-2153(A), 32-2155(A)(B), 32-2163, 32-2176, and R4-28-1101(B).
A.R.S. § 32-2102 provides that the department of Real Estate, under the direction of the Real Estate
Commissioner, shall administer Title 32 Chapter 20.
Policy Program: Regulation
Effective Date: 6-18-2008
No. 2008.05 rev. Short Title: Continuing Education Requirements for Renewal of 4-Year License
(REPEALED effective January 29, 2014)
No. 2008.04 rev. Short Title: Business Brokers; License Requirement Clarification (REPEALED
effective January 27, 2011)
No. 2008.03 rev. Short Title: Acceptable Forms of Payment
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: The Department will only accept payment for fees and for any other
purposes when made by credit card, cash, check, or money order.
Acceptable checks include pre-printed personal or business account checks or drafts, either in-state or
out-of-state. Two-party checks, counter checks or any check not pre-printed with the name and address
of the account holder, the name of the subject financial institution and the account number are considered
unacceptable forms of payment.
Payment of a civil penalty shall be by credit card, money order, certified check, cashier’s check or cash.
If an individual or entity has an outstanding ‘‘bad check,’’ no further checks or payment of any other kind
for any purpose will be accepted by the Department from that individual or entity until the outstanding
check is redeemed, using a credit card, cashier’s check, money order, certified check or cash.
The Department will accept one form of payment per transaction.
Authority: A.R.S. §§ 32-2125.01, -2129, -2130, -2186, -2194.02, -2195.02, -2196, -2197.05 and -2198.09
authorize the Commissioner to assess fees and prescribe the amounts to be charged. A.R.S. § 35-142(l)
authorizes state agency acceptance of credit card payments pursuant to § 35-515.
Policy Program: Commissioner’s Office
Effective Date: 2-8-2008
No. 2008.02 rev. Short Title: Subsequent Owners/Subdivision Disclosure Reports (Public Reports)
(REPEALED effective September 13, 2013).
No. 2008.01 rev. Short Title: Pre-license Education Waiver (REPEALED effective March 3, 2011)
No. 2007.18 rev. Short Title: Real Estate Licensee Advertising
This substantive policy statement is advisory only. A substantive policy statement does not include internal
procedural documents that only affect the internal procedures of the agency and does not impose additional
requirements or penalties on regulated parties or include confidential information or rules made in accordance with
the Arizona Administrative Procedure Act. If you believe that this substantive policy statement does impose additional
requirements or penalties on regulated parties you may petition the agency under ARS 41-1033 for a review of the
statement.

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Description of Practice/Procedure: To reduce unsubstantiated complaints and the backlog of
investigations from such complaints regarding telephone and address requirements for advertising by a
licensee, the following clarifies the Commissioner’s Rules on advertising.
There is no statute or rule that states which telephone number (employing broker’s or licensee’s)
or address must appear in an advertisement.
R4-28-502 (E) requires that the (legal or dba) name of the EMPLOYING BROKER (the corporation,
partnership, limited liability company or sole proprietor) appears in all advertising in ‘‘a clear and
prominent manner.’’
R4-28-502 also addresses other requirements for advertising not addressed in this Substantive Policy
Statement.
Authority: A.R.S. § 32-2102 provides that the Department of Real Estate, under the direction of the Real
Estate Commissioner, shall administer Title 32, Chapter 20. A.R.S. § 32-2153(A)(3) provides that violation
of the Commissioner’s Rules is subject to disciplinary action.
Policy Program: Regulation
Effective Date: Revised, effective 2-12-2007
No. 2007.17. Short Title: Electronic License Certificate Complies with Statutory Requirement
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: The Department of Real Estate will deem a printout of data
contained in the ADRE Public Database, or an electronic file of such data that can be recreated
electronically or on paper upon request, to be a license certificate. This will increase efficiencies and
enhance the timelines of issuing license certificates to real estate, cemetery and membership camping
salespersons and brokers.
A broker may comply with the statutory requirement that the broker retain and have the certificates
available for inspection by accessing the licensed employee’s record in the Public Database at
www.azre.gov and printing a copy showing current and active licensure to the employing broker or having
this data available electronically.
Employing broker and designated broker license certificates must still be displayed. An acceptable form is
a printout of data contained in the ADRE Public Database.
Authority: A.R.S. § 32-2102 provides that the Department of Real Estate, under the direction of the Real
Estate Commissioner, shall administer Title 32, Chapter 20. A.R.S. § 32-2128 requires designated
brokers and, where applicable, employing brokers, to prominently display their licenses in the office of the
broker. Designated brokers are also required to have the licenses of salespersons and associate brokers
licensed to the broker available and retained by the broker until or unless the license is returned to the
Department due to license expiration, sever of employment, cancellation, suspension, termination or a
change of employment information. A.A.C. R4-28-303. A.R.S. § 32-2151.01 requires the employing
broker to maintain in the broker’s files a copy of employment status for all current and former employees
for a period of at least 5 years from the date of the termination of employment.
Policy Program: Licensure/Regulation
Effective Date: Feb 1, 2007
No. 2006.16 rev. (REPEALED)

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No. 2005.15. Short Title: Broker Home Office
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: This policy is to describe the circumstances when the Department
will not require compliance with the signage requirement. Some brokers retain their licenses on active
status but do little or no real estate related activity and do not maintain an office outside their home.
A.R.S. § 32-2126(B) provides, in part, that ‘‘Each designated broker and, if applicable, each employing
broker shall cause a sign to be affixed at the entrance to the broker’s place of business, in a place and
position clearly visible to all entering the place of business, with the name of the broker, the name under
which the broker is doing business if other than the broker’s given name, . . .’’
The Department will not consider a broker to be in violation of the signage requirement under the
provisions of A.R.S. § 32-2126(B) when the broker:
A. maintains a home office in the broker’s PRIMARY RESIDENCE,
B. handles FEWER THAN 3 transactions a year (0, 1, or 2), and
C. has no real estate related employees (licensed or unlicensed)
The broker shall clearly and obviously display the broker’s real estate license in the home office, and
comply with all other applicable statutory and rule requirements to hold a broker’s license.
Authority: A.R.S. § 32-2102 provides that the Department of Real Estate, under the direction of the Real
Estate Commissioner, shall administer Title 32, Chapter 20, Ariz. Rev. Stat.
Policy Program: Licensing/Enforcement/Auditing
Effective Date: December 28, 2005
No. 2005.14. Short Title: Fair Housing Course Substitute
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: Fair Housing Issues is a mandatory category for real estate license
renewal: Real estate licensees must take a minimum of three credit hours in the six mandatory
categories, and a total of twenty-four credit hours of Department-approved courses to apply for renewal of
their real estate licenses.
Some licensees engage exclusively in specialties in which Fair Housing is not an issue, for instance, farm
and ranch sales, business brokerage and commercial sales/leasing. These licensees who deal
exclusively in real estate specialty areas have requested an accommodation to allow them to substitute a
class applicable to their area of specialization instead of taking a course in Fair Housing.
1.

A real estate renewal applicant who is engaged in a specialty that does not include residential
transactions may substitute an additional class that has been approved for a minimum of three
credit hours in place of the mandatory Fair Housing course when all of the following apply:
a. The licensee’s business is exclusively in a specialty field in which the fair housing
law does not apply;
b. The licensee provides proof (or has previously provided proof) of attendance at a
Department-approved fair housing course in the past;
c. The substitute course proposed is relevant to the licensee’s real estate activities.

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2.

To request the course substitution, the licensee shall submit an email to education@azre.gov
prior to initiating the license renewal application process that specifically states the licensee’s
compliance with the criteria listed in 1 above.

3.

The Education Division will approve or deny the requested replacement class and inform the
licensee of the decision. If approved the licensee may proceed with the renewal process using
the substitute course.

Authority: A.R.S. § 32-2130(A), A.R.S. § 32-2130; A.A.C. R4-28-402 (A)(5), A.A.C. R4-28-402(B).
Policy Program: Education
Effective Date: August 9, 2005; Revised November 5, 2008
No. 2005.13. Short Title: Agent Responsibility to Client
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: A licensee is a real estate professional with a fiduciary duty to his or
her client to act in the client’s best interests as described in R4-28-1101(I). Reasonable care or
competence may include recommending that a client seek professional or technical advice when the
matter is beyond the expertise of the agent.
Licensees are expected to take reasonable steps to assist their clients in confirming or verifying
information under circumstances in which a reasonably prudent real estate professional has reason to
question the accuracy of the information being provided in a transaction, or where the client has
questioned the accuracy of the information.
These considerations are intended to provide a reasonable standard for licensees to follow in complying
with their duties and obligations under statute and rule.
Authority: Commissioner’s Rule R4-28-1101 describes a licensee’s ‘‘professional duties’’ and A.R.S. §
32-2153(A)(3) and (22) identify violation of rules and negligence as grounds for disciplinary action against
a licensee.
Policy Program: Enforcement
Effective Date: Revised 6/1/2001; revised and renumbered 5/28/04, revised and renumbered 4/8/2005.
No. 2005.12. Short Title: Continuing Education and the Residential Resale Purchase Contract
(REPEALED effective January 27, 2011)
No. 2005.11. Short Title: Subdivision Public Report Application Form, Changes
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: The Application for Subdivision Public Report may be updated on a
quarterly basis to insure proper and full disclosure to prospective purchasers. This is subject to public
health, safety, and welfare issues which may result in an immediate change to the subdivision application
form.
A. Prior to publication of the updated application form, a draft will be provided to stakeholders for
review. Stakeholders will be provided no less than ten (10) business days to provide comment to
the Department.
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B. After receiving and reviewing stakeholder comments, the updated application form will be
published and placed on the Department website for download by applicants.
Authority: A.R.S. § 32-2181 provides the Commissioner authority to create and modify the application
form for public report.
Policy Program: Subdivisions.
Effective Date: April 1, 2005.
No. 2005.10. Short Title: Electronic Signatures
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: A broker may use an electronic signature to indicate the broker’s
approval of contracts and agreements as required by statute. The following elements or requirements
must be met and will be the basis for any Broker Audit of that aspect of the broker’s practice:
A. System must meet the criteria under A.R.S. § 44-7031: A signature is a secure electronic
signature if, through the application of a security procedure, it can be demonstrated that the
electronic signature at the time the signature was made was all of the following:
1.
2.
3.
4.

Unique to the person using it.
Capable of verification.
Under the sole control of the person using it.
Linked to the electronic record to which it relates in such a manner that if the record were
changed the electronic signature would be invalidated.

B. The brokerage must have and enforce a written internal policy regarding personal computer
security and, at a minimum, require that any person with electronic signature authority and
capability locks or signs off his/her computer every time they walk away from their computer.
C. The brokerage must have a back-up system defined for when the computers are down for an
extended period of time. (i.e. how and when contracts and agreements will be manually
reviewed).
D. The system must have the ability to create a secure history log of all activity for electronic
signatures which can be reviewed by Department auditors and investigators.
Authority: A.R.S. § 32-2151.01 identifies Arizona Licensed Broker requirements for record keeping.
Subsection G requires the designated broker to review each listing agreement, purchase or lease
agreement or similar instrument within 5 days of the date the parties executed the document, and to place
the broker’s initials and date of review on the same page as the parties’ signatures. Commissioner’s Rule
R4-28-1103 describes a broker’s professional duties and requirement for written policy manual.
Policy Program: Enforcement/Auditing
Effective Date: 11/5/2004; Renumbered 4/01/05.
No. 2005.09 rev. Short Title: Non-commercial Requests to Inspect Department Records & Fees for
Copies
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.

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Description of Practice/Procedure: Arizona’s public record statute, A.R.S. § 39-121, provides: ‘‘Public
records and other matters in the office of any officer at all times during office hours shall be open to
inspection by any person.’’
Contact the Custodian of Records, Arizona Department of Real Estate, 2910 N. 44th Street, Suite 110,
Phoenix, AZ 85018, to request an appointment to review, or in writing to request copies of, any file of
record at The Department. If the request is for numerous files or a requested file is stored off-site,
additional time may be required. Fees charged to ADRE for retrieval will be passed on to the requesting
party. The charge for photocopies of records is published in the ADRE Fee Schedule available on the
ADRE web site: www.azre.gov, for non-commercial use, except in response to any Subpoena Duces
Tecum. Fees for certification of copies, fees for employment histories, and other similar services are also
published in that Schedule.
The following sets out the minimum number of days typically required for files to be retrieved and any
restricted information to be redacted:
1) 3-5 day advance notice for: salesperson, broker, school, instructor or course file.
2) 3-5 days advance notice for: audit inspection or hearing/disciplinary file.
3) 5-7 days advance notice for: recovery fund files; public report files (for: subdivisions, time-shares,
membership campgrounds, & unsubdivided land); cemetery applications; and closed
investigative files.
The Department will deny public inspection of a particular document if:
1)
2)
3)
4)
5)
6)
7)
8)

the document is made confidential by statute;
the document involves the privacy interests of persons;
disclosure would be detrimental to the best interests of the state;
it is correspondence between the Attorney General’s Office and the Department, or any other
document, that contains information protected under attorney/client privilege;
it is criminal history record information; or
it is a written offer to settle or compromise, or is correspondence related to settlement of
administrative actions by the Department;
it is an internal memorandum regarding regulated parties and case strategy; and
it is an instrument of the internal deliberative process.

The Department will deny public inspection or reproduction of information and documents in open (active
or pending) audits and investigations, unless the Commissioner authorizes disclosure of the information
or production of documents as being in the public interest. Such open files remain confidential until the
matter is final, a notice of hearing is issued, or the matter is settled by consent order.
The following information shall be redacted:
1) a licensee’s date of birth and Social Security Number; and
2) in some circumstances, the residence address of a licensee.
Authority: The authority to charge a fee for copying is at A.R.S § 39-121.03. Fees for copies required by
a Subpoena Duces Tecum are set by Arizona Rules of Civil Procedure. The authority to withhold specific
documents from the Department’s public record is cited for the following types of documents:
correspondence between the Attorney General’s Office and the Department as well as advice given to the
Department from the Attorney General’s Office pursuant to A.R.S. § 12-2234; criminal history record
information pursuant to A.R.S. § 41-1740; written offers to settle or compromise administrative actions by
the Department; all correspondence related to settlement negotiations pursuant to Rule 408, Arizona
Rules of Evidence; and memoranda, both interoffice & intra-office, to the Commissioner, either directly or
through the supervisory chain of command, of an advisory or consultative nature pursuant to the
deliberative process privilege. The authority to keep confidential all information and documents in an open
audit file or investigation file is found at A.A.C. R4-28-1303. The authority to redact certain data from the
Department’s records before they are produced includes: dates of birth pursuant to Scottsdale Unified
School District v. KPNX, 191 Ariz. 297, 955 P.2d 534 (1998); Social Security Numbers pursuant to 42
USC § 405 (c)(2)(C)(viii)(I). See S.P.S. 2005.03 relative to restricted release of home addresses.

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Policy Program: Administration; Administrative Actions; Education & Licensing; Investigations & Audits;
Subdivision Compliance.
Effective Date: 6/18/1999; Revised & Renumbered 5/28/04; Renumbered 4/01/2005; Revised 8/21/2006.
No. 2005.08. Short Title: Payment of Commission to Salesperson After License Expiration or
Transfer of Employment
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: When a real estate licensee has rightfully earned a commission
while in the employ of a broker, and in accordance with their agreement, that broker shall pay the
licensee, even though the licensee may have left the employ of that broker. The same finding applies to
similar circumstances for an associate broker.
Authority: A.R.S. § 32-2155
Policy Program: Enforcement
Effective Date: 6/18/99; Revised & Renumbered 5/28/04; Renumbered 4/01/05.
No. 2005.07. Short Title: Department Investigation of Cases Involving Civil Litigation
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: A Complainant’s filing of a civil suit has no bearing on whether the
Department will pursue an alleged violation of a statute or rule within the Department’s jurisdiction. The
Department shall commit the appropriate resources to investigate possible violations.
The Department monitors and regulates real estate licensees, but does not determine a licensee’s civil
liability to third parties. A finding by the Department that a violation warranting administrative action did or
did not occur, is not dispositive of liability and does not create any presumption regarding whether or not
civil liability exists.
The Department’s investigations shall not be utilized for the purpose of circumventing the Arizona Rules
of Civil Procedure or as a means of discovery of evidence for use in civil litigation. The Department will
not intentionally place itself in the position of providing discovery and building a prima facie case for a
Complainant, only to have the Complainant use the Department’s investigative file as evidence in a civil
suit. It is not the Department’s role to assist a Complainant to develop a case that will assist them
pursuing damages.
The Department shall not delay an investigation to await the outcome of a civil court proceeding. Such a
delay may discourage or financially inhibit a Complainant’s pursuit of a civil cause of action. Such a delay
might also encourage a licensee to assert the Department’s inaction as an argument in the licensee’s
favor.
Authority: The Department’s authority to investigate alleged or perceived violations of Arizona Revised
Statutes Title 32, Chapter 20, and Title 4, Chapter 28 of the Arizona Administrative Code, is found at
A.R.S. § 32-2108.
Policy Program: Enforcement.
Effective Date: 6/18/99; Revised & Renumbered 5/28/04; Renumbered 4/01/05.
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No. 2005.06. Short Title: Electronic Record Keeping
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: Licensees of the Department (brokers, property management
1
companies and cemetery owners) are required to retain copies of transactions . Brokers and
2
management companies are also required to keep employment records . Records pertaining to trust
accounts, if kept electronically, must be able to be reconstructed ‘‘. . . in the event of destruction of
electronic data.’’
A licensee may retain the required transaction and employment records by electronic means, providing
that all of the following conditions are met:
1) The records are maintained in a manner allowing reconstruction in the event of destruction of
electronic data.
2) The records can be produced, at the broker’s expense, in legible, written form (‘‘hard copy’’) upon
request by the Commissioner, or the Commissioner’s representative, for auditing, inspection, or
investigation purposes.
3) The electronic records are exact duplicates of the original.
4) The stored records are legible.
Authority: Brokers are required to retain records pursuant to A.R.S. §§ 32-2151(B)(2), 32-2151.01(A),
32-2151.01(H), 32-2175(A), 32-2175(B) and 32-2194.06(A) and (B). A.R.S. § 32-2151(B)(2) requires that
trust account records that are maintained electronically be able to be reconstructed. A.R.S. § 322194.03(E) requires a cemetery owner or the owner’s agent to keep and maintain records of all sales
transactions and monies received, and authorizes examination of the books and records of the cemetery
owner or agent. A.R.S. §§ 32-2108(A), 32-2175(H) and 32-2194.06 (B) authorize the Commissioner to
examine the books and records of any natural person or entity engaged in the business or acting in the
capacity of a broker, salesperson or developer. Pursuant to A.R.S. § 32-2107, the Commissioner is
authorized to administer the Department and the provisions under its jurisdiction.
Policy Program: Licensing
Effective Date: 8/15/2000; Revised & Renumbered 5/28/04; Renumbered 4/01/05.

1

Transaction records, referenced herein, include records of all real estate, cemetery, time-share and membership camping
transactions handled by or through a broker, property management firm, or cemetery owner or agent, including contracts and
addenda, earnest money receipts, closing statements showing all receipts, disbursements and adjustments, lease contracts,
employment agreements (including property management, listing, and buyer-broker agreements), residential and nonresidential
leasing or rental agreements.
2

Employment records include forms evidencing hiring, severing (terminating), or license renewal of employed licensees.

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No. 2005.05. Short Title: Access to Arizona Real Estate Law Book on the World Wide Web
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: A.R.S. § 32-2123(E) states, in part: ‘‘Each person licensed pursuant
to this article, whether the license is active or inactive, shall have available for the licensee’s use a current
copy of the department’s statutes, rules and annotations pertaining to real estate laws.’’
The Commissioner considers unrestricted access to the World Wide Web, and thus to the on-line edition
of the Arizona Real Estate Law Book on the Department’s Web site at http://www.re.state.az.us, to satisfy
the requirements of this statute.
‘‘Unrestricted access’’ is defined as access to the Department Web Site at any time without the
permission or assistance of others.
Authority: Pursuant to A.R.S. § 32-2107, the Commissioner has charge of the Department and authority
to administer the laws and rules adopted pursuant to Arizona Revised Statutes, Title 32, Chapter 20.
Policy Program: Education
Effective Date: December 6, 1999; Renumbered 5/28/04; Renumbered 4/01/05.
No. 2005.04. Short Title: Unlicensed Assistants
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: In looking at the issue of unlicensed assistants, various aspects
must be considered, including what activities the individual will perform and how the individual is paid. If
an unlicensed assistant is paid on any basis that relies on the ultimate sale of a property, then that person
must be licensed.
An unlicensed assistant in the employ of a licensed real estate broker may:
1) Perform telephone duties, to include calls to:
a. collect demographic information
b. solicit interest in engaging the services of a licensee or brokerage
c. set or confirm appointments (with no other discussion) for:
i. A licensee to list or show property
ii. A buyer with a loan officer
iii. A property inspector to inspect a home
iv. A repair/maintenance person to perform repairs/maintenance
v. An appraiser to appraise property
d. mortgage and/or title companies to track the status of a file, check daily interest rates and
points, whether buyer has been qualified, confirm closing appointment for licensee, and
so forth
2) Assist a licensee at an open house
3) Unlock a home for a licensee so that licensee can show a buyer the property or preview the
property (no discussion about the property)
4) Deliver documents (as a mail or delivery service only)
An unlicensed assistant shall not perform the following activities:
1) Hold/host an open house without an agent being present
2) Perform a walk-through inspection
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3) Answer questions relating to a transactional document
4) Give instructions to inspectors, appraisers or maintenance/repair people. Because these
instructions are part of the licensee’s regular duties and there is a direct relationship to the
(potential) transaction, a license is required in order to give instructions to inspectors appraisers
or repair/maintenance people
Authority: A.R.S. § 32-2101(46) defines the activities of a real estate broker, for which licensure is
required pursuant to A.R.S. § 32-2122. See also A.R.S. § 32-2121.
Policy Program: Enforcement
Effective Date: Revised April 3, 2000; Revised & Renumbered 5/28/04; Renumbered 4/01/05.
No. 2005.03. Short Title: Disclosure of Licensee’s Home Address
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: Only the business addresses and telephone numbers of activestatus licensees are disclosed to the public. Requests for the residential address and telephone number
of an active status licensee shall be denied, except in the cases of those self-employed brokers whose
business and residential addresses are the same. State law requires the Department to make available to
the public the residential address and telephone number of an inactive licensee unless the inactive
licensee provides the Department with a current and valid alternative mailing address and alternative
telephone number. A licensee who has obtained an Order of Protection may provide the Department with
a current and valid alternative mailing address and alternative telephone number.
All licensees are required to provide and maintain their current residential address on file with the
Department. All licensees are required to notify the Department within 10 days of any changes to their
personal licensing data, including personal (residence) address.
Authority: A.R.S. § 32-3801, adopted April 4, 1997, states that a licensee’s residential address and
telephone number shall not be available unless that is the only address on file. At the Department, a
business address is available when the license held is current and an employing broker employs the
licensee. This law superseded the 1996 provision that authorizes the Commissioner to keep confidential a
licensee’s home address and telephone number for good cause upon a request by the licensee. A.R.S. §
32-2123 requires an applicant to provide the applicant’s residential address. A.A.C. R4-28-301 (E) & R428-303 require the residential address be kept current.
Policy Program: Licensing
Effective Date: Revised 12/6/01; Revised & Renumbered 5/28/04; Renumbered 4/01/05.
No. 2005.02. Short Title: Attendance Requirements for Credit & Enforcement
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: A.R.S. § 32-2124(B) and (C) and § 32-2130(A) require licensees to
attend a prescribed amount of time in pre-licensure and continuing education classes. Tardiness may
preclude a student from receiving credit for the course. Commissioner’s Rule R4-28-101(3) defines ‘‘credit
hour’’ as a fifty minute period of instruction, which allows students a 10-minute break for each sixty
minutes and still receive an ‘‘hour’’ of credit for each 50 minutes spent under instruction.

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When a course sponsor schedules a class, the customary practice is to schedule just enough time to
cover breaks and meet the ‘‘fifty-minutes-of-instruction’’ definition (standard) to award each approved
credit hour. The course instructor and the real estate school providing the course are responsible for
enforcing the above standard.
Authority: The authority to approve or disapprove courses and course sponsors exists in A.R.S. § 322135 and Title 4, Chapter 28, Article 4 of the Arizona Administrative Code. Attendance is required in order
for Department-approved credit is issued pursuant to A.R.S. §§ 32-2124 (B) and (C), 32-2130 and A.A.C.
R4-28-101.
Policy Program: Education
Effective Date: June 18, 1999; Revised & Renumbered 5/28/04; Renumbered 4/01/05.
No. 2005.01.Short Title: Acceptable Forms of Payment
This substantive policy statement is advisory only. A substantive policy statement does not include
internal procedural documents that only affect the internal procedures of the agency and does not impose
additional requirements or penalties on regulated parties or include confidential information or rules made
in accordance with the Arizona Administrative Procedure Act. If you believe that this substantive policy
statement does impose additional requirements or penalties on regulated parties you may petition the
agency under ARS 41-1033 for a review of the statement.
Description of Practice/Procedure: The Department will only accept payment for fees and for any other
purposes when made by cash, check or money order, or by acceptable credit card for specified on-line
transactions.
Acceptable checks include pre-printed personal or business account checks or drafts, either in-state or
out-of-state. The Department will not accept two-party checks, counter checks or any check not preprinted with the name and address of the account holder, the name of the subject financial institution and
the account number.
1

Payment of a civil penalty shall be paid by money order, certified check, cashier’s check or cash . If an
individual or entity has an outstanding ‘‘bad check,’’ no further checks or payment of any other kind for
any purpose will be accepted by the Department from that individual or entity until the outstanding check
is redeemed, including returned check costs, using a cashier’s check, money order, certified check or
cash.
On-Line transactions, including license renewals, hire or sever requests, and transfers of employment,
may be paid using a Discover, Visa, MasterCard or American Express credit card at the conclusion of the
on-line session, after the user has been automatically redirected to a secure website.
Authority: A.R.S. §§ 32-2125.01, -2129, -2130, -2186, -2194.02, -2195.02, -2196, -2197.05 and 2198.09 authorize the Commissioner to assess fees and prescribe the amounts to be charged. A.R.S. §
35-142(I) authorizes state agency acceptance of credit card payments pursuant to § 35-315.
Policy Program: Business Office/Administration
Effective Date: June 18, 1999; Renumbered 5/28/04; Revised and Renumbered 4/01/05.

1

Cash normally may be accepted only at the front counter, not through the mail; however, if cash is received by mail, it shall be
accepted and receipted. The licensee assumes all risk for transmitting cash by mail.

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Title 11, Chapter 8 DEVELOPMENT FEES
Article 2 Real Estate Transfer Affidavit and Fee
11-1131. Definitions
In this article, unless the context otherwise requires:
1. "Department" means the department of revenue.
2. "Value" means:
(a) In any case other than a gift, the amount of the full actual consideration that is paid or
to be paid, including the amount of any lien or liens.
(b) In the case of a gift or a contract or deed with nominal consideration or without stated
consideration, the estimated price the property would bring in an open market and under
the prevailing market conditions in a sale between a willing seller and a willing buyer,
both of whom are conversant with the property and with prevailing general price levels.
11-1132. Real estate transfer fee; collection; disposition of proceeds
A. Before recording a deed or contract relating to the sale or transfer of real property, the county recorder
shall collect a fee of two dollars for the deed or contract, in addition to the fee collected pursuant to
section 11-475.
B. The county shall retain all monies collected pursuant to this section in the same manner as monies
collected under section 11-475.
11-1133. Affidavit of legal value
A. Each deed evidencing a transfer of title and any contract relating to the sale of real property shall have
appended at the time of recording an affidavit of the seller and the buyer to the transaction, or the agent
of either the seller or buyer, or both, in a form approved by the department of revenue, who shall declare
and jointly certify the following information:
1. The name and address of the buyer and seller.
2. The name and address where a tax statement may be sent.
3. The complete legal description of the property.
4. The situs address, if any, of the property.
5. The date of sale.
6. The total consideration paid for the property, the amount of cash down payment and whether
or not the type of financing included cash, a new third party loan, a new loan from the seller, an
assumption of an existing loan or an exchange or trade of property.
7. Whether or not the estimated market value of personal property received by the buyer equals
five per cent or more of the total consideration.
8. The assessor's parcel number or numbers assigned to the real property by the county
assessor or, in the case of a new parcel or parcels not yet assigned a parcel number, the parcel
number or numbers of the previous parcel or parcels from which the new parcel or parcels are
created.
9. The conditions of the transaction including the relationship, if any, of the parties.
10. The use and description of the property and, in the case of a residential dwelling, whether the
property is to be owner-occupied or rented.
11. The name and address of the person to contact regarding information contained on the
affidavit.
B. If a beneficiary of a foreclosed trustee's deed receives payment based on private mortgage insurance
covering the sale that is in addition to the proceeds of the sale, the beneficiary shall submit, in a form
approved by the department of revenue, to the county recorder in the county where the property is
located within four months after the date of the trustee's sale a beneficiary's declaration of additional
funds received that contains the following:
1. The county assessor's parcel number or numbers assigned as of the date of the trustee's sale.
2. The name and address of the beneficiary submitting the declaration.
3. The date of the trustee's sale.
4. The highest bid amount received by the trustee at the trustee's sale.
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5. The recording number of the trustee's deed on sale.
6. The amount of any additional compensation received by the beneficiary within three months
after the date of the trustee's sale.
C. The county recorder shall refuse to record any deed and any contract relating to the sale of real
property if a complete affidavit of legal value is not appended unless the instrument bears a notation
indicating an exemption pursuant to section 11-1134.
D. An affidavit is complete for purposes of this section if all of the required information is stated on the
affidavit form or is indicated on the
form as "not applicable".
11-1134. Exemptions
A. The affidavit and fee required by this article do not apply to the following instruments:
1. A deed that represents the payment in full or forfeiture of a recorded contract for the sale of
real property.
2. A lease or easement on real property, regardless of the length of the term.
3. A deed, patent or contract for the sale or transfer of real property in which an agency or
representative of the United States, this state, a county, city or town of this state or any political
subdivision of this state is the named grantor, and authorized seller, or purchaser.
4. A quitclaim deed to quiet title as described in section 12-1103, subsection B or otherwise
executed for no monetary consideration.
5. A conveyance of real property that is executed pursuant to a court order.
6. A deed to an unpatented mining claim.
7. A deed of gift.
B. The affidavit and fee required by this article do not apply to a transfer of title:
1. Solely in order to provide or release security for a debt or obligation, including a trustee's deed
pursuant to power of sale under a deed of trust.
2. That confirms or corrects a deed that was previously recorded.
3. When the transfer of title has only nominal actual consideration for the transfer of residential
property between:
(a) Husband and wife or ancestor of the husband and wife.
(b) Parent and child, including natural or adopted children and their descendants.
(c) Grandparent and grandchild.
(d) Natural or adopted siblings.
4. On a sale for delinquent taxes or assessments.
5. On partition.
6. Pursuant to a merger.
7. For no consideration or nominal consideration:
(a) By a subsidiary to its parent or from a parent to a subsidiary.
(b) Among commonly controlled entities.
(c) From a member to its limited liability company or from a limited liability company to a
member.
(d) From a partner to its partnership.
(e) From a partnership to a partner.
(f) From a joint venturer to its joint venture.
(g) From a joint venture to a joint venturer.
(h) From a trust beneficiary to its trustee.
(i) From a trustee to its trust beneficiary.
(j) From any of the entities in subdivisions (a) through (i) of this paragraph to a single
purpose entity in order to obtain financing.
8. From a person to a trustee or from a trustee to a trust beneficiary with only nominal actual
consideration for the transfer.
9. To and from an intermediary for the purpose of creating a joint tenancy estate or some other
form of ownership.
10. From a husband and wife or one of them to both husband and wife to create an estate in
community property with right of survivorship.

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11. From two or more persons to themselves to create an estate in joint tenancy with right of
survivorship.
12. Pursuant to a beneficiary deed with only nominal actual consideration for the transfer.
13. From an owner to itself or a related entity for no or nominal consideration solely for the
purpose of consolidating or splitting parcels.
14. Due to a legal name change.
C. Any instrument that describes a transaction that is exempt under this section shall note the exemption
on the face of the instrument at the time of recording, indicating the specific exemption that is claimed.
11-1135. Transmitting affidavit or data to county assessor, Arizona state library, archives and
public records and department of revenue
A. The county recorder shall:
1. Place the fee or recording number of the deed and the date of recording on the original
affidavit.
2. Scan the affidavit and transmit an electronic copy to the department and the Arizona state
library, archives and public records, and transmit either the original or an electronic copy of the
original to the county assessor.
B. The county assessor shall transmit the data contained within the affidavit to the department.
C. The county shall transmit the original affidavit, when no longer in active use, to the Arizona state
library, archives and public records.
11-1136. Administrative and enforcement powers of department
A. The department may prescribe rules that are reasonably necessary to facilitate and expedite the
imposition, collection and administration of the fee imposed pursuant to this article.
B. The department or its authorized agents may:
1. Examine books, papers, records or other data bearing on the correctness of any affidavit that is
filed or fee that is collected pursuant to this article.
2. Require the attendance of any person and administer oaths and take testimony with respect to
these matters.
11-1137. Violations; classification
A. A county recorder or employee of the recorder who knowingly records any deed or contract for which a
fee is charged by this article without collecting the additional fee is guilty of a class 2 misdemeanor.
B. Any person who knowingly fails to provide or knowingly falsifies the information that is required by this
article on the affidavit of legal value is guilty of a class 2 misdemeanor.

Title 32, Chapter 36 STATE BOARD OF APPRAISAL
Article 1 General Provisions
32-3601. Definitions
In this chapter, unless the context otherwise requires:
1. "Appraisal" or "real estate appraisal" means a statement that is independently and impartially prepared
by an individual setting forth an opinion as to the market value of real property as of a specific date and
supported by the presentation and analysis of relevant market information.
2. "Appraisal assignment" means an engagement for which a real estate appraiser is employed or
retained to act, or would be perceived by third parties or the public in acting, as a disinterested third party
in rendering an unbiased analysis, opinion or conclusion relating to the nature, quality, value or utility of
specified interests in or aspects of identified real estate.
3. "Appraisal foundation" means the appraisal foundation incorporated as an Illinois not-for-profit
corporation on November 30, 1987.
4. "Appraisal report" means any communication, written or oral, of an appraisal.
5. "Appraisal review" means the act of reviewing or the report that follows a review of an appraisal
assignment or appraisal report in which a real estate appraiser forms an opinion as to the adequacy and
appropriateness of the report being reviewed.
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6. "Appraisal standards board" means the appraisal standards board appointed by the board of trustees
of the appraisal foundation to develop, interpret and amend the uniform standards of professional
appraisal practice.
7. "Appraisal subcommittee" means the subcommittee of the federal financial institutions examination
council created pursuant to 12 United States Code section 3310 and chapter 34A, as amended.
8. "Appraiser qualifications board" means the appraiser qualifications board that is appointed by the board
of trustees of the appraisal foundation to establish the minimum education, experience and examination
requirements for real estate appraisers.
9. "Complex one to four residential units" means property that is atypical for the marketplace. Atypical
factors may include architectural style, age of improvements, size of improvements, size of lot,
neighborhood land use, potential environmental hazard liability, leasehold interests, limited readily
available comparable sales data or other unusual factors.
10. "Course approval" means the act of the Superintendent reviewing course materials to form an opinion
as to the adequacy and appropriateness of the course for licensing pursuant to section 32-3613,
certification pursuant to section 32-3614 and continuing education as prescribed in section 32-3625 in
accordance with the appraiser qualifications board and this chapter.
11. "Federal financial institutions examination council" means that agency of the federal government
created pursuant to 12 United States Code chapters 34 and 34A, as amended.
12. "Federally related transaction" means any real estate related financial transaction that a federal
financial institution's regulatory agency or the resolution trust corporation engages in, contracts for or
regulates and that requires an appraisal.
13. "Property tax agent" means an individual who is designated by a person or is an employee of an entity
designated as an agent pursuant to section 42-16001, who acts on behalf of a person who owns, controls
or possesses property valued by a county assessor and who receives a fee for the analysis of any matter
relating to the review of the valuation of the person's property before the assessor. Property tax agent
does not include a person who is admitted to practice law in this state, an employee of the person
owning, controlling or possessing the property or an employee of an entity designated pursuant to section
42-16001, if the employee is performing a secretarial, clerical or administrative support function.
14. "Real estate" means an identified parcel or tract of land, including improvements, if any.
15. "Real estate related financial transaction" means any transaction involving the sale of, lease of,
purchase of, investment in or exchange of real property, including interests in property or the financing of
property, the refinancing of real property or interests in real property and the use of real property or
interests in property as security for a loan or investment including mortgage-backed securities.
16. "Real property" means one or more defined interests, benefits and rights inherent in the ownership of
real estate.
17. "Registered trainee appraiser" means a person who meets both of the following requirements:
(a) Is registered with the Superintendent and meets the appraiser qualifications board's
qualifications for trainee appraisers to perform appraisal services only under the direct
supervision of a certified appraiser who has met the minimum criteria to be a supervisory
appraiser.
(b) Accepts assignments only from the registered trainee appraiser's supervisory appraiser.
18. "Review appraiser" means a person who engages in the activity of reviewing and evaluating the
appraisal work of others from the perspective of an appraiser, generally for compensation as a separate
skill. This includes the function of reviewing an appraisal report or a file memorandum setting forth the
results of the review process.
19. "Standards of professional appraisal practice" means the uniform standards of professional appraisal
practice adopted by the Superintendent.
20. "State licensed or state certified appraiser" means a person who develops and communicates
appraisals and who holds a current, valid license or certificate issued under this chapter.
21. “Superintendent” means the Superintendent of Financial Institutions.
22. "Supervisory appraiser" means a state certified appraiser who has a supervisory appraiser
designation and who:
(a) Has been in good standing for the last three years in the jurisdiction in which the registered
trainee appraiser practices.
(b) Has not been disciplined in a manner that affects the supervisory appraiser's eligibility to
engage in appraisal practice in any jurisdiction in the last three years.
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(c) Directly supervises registered trainee appraisers by doing the following:
(i) Accepting responsibility for an appraisal by signing and certifying that the appraisal
complies with the uniform standards of professional appraisal practice.
(ii) Reviewing and signing all registered trainee appraiser reports.
(iii) Personally inspecting each appraised property with the registered trainee appraiser.
23. "Value" means the monetary relationship between properties and those who buy, sell or use those
properties.
32-3602. Applicability of chapter
This chapter does not apply to:
1. A real estate broker or salesperson who is licensed in this state and who, when acting as such, gives
an opinion as to the price of real estate if this opinion is not referred to as an appraisal.
2. A natural person, a corporation through its officers or a partnership through its partners that gives an
opinion of value of that person's or its own property and does not receive special compensation for the
transaction if this opinion is not referred to as an appraisal.
3. An attorney in the performance of that person's duties as an attorney.
4. A mortgage banker, mortgage broker or commercial mortgage banker who is licensed in this state and
who, when acting as such, prepares a report analyzing real property if the report is not made for the
primary purpose of establishing the sale or market value of the property.
5. An individual who is otherwise subject to licensing or certification by law and whose duties require
appraisal of real property for purposes of tax assessment.
6. An engineer or architect registered in this state or a contractor or insurance producer licensed in this
state who, when acting as such, prepares a report analyzing real property if the report utilizes the
specialized knowledge of the registered engineer or architect or the licensed contractor or insurance
producer.
7. A property tax agent who is registered in this state and who, when acting as such, prepares a report
analyzing real estate if the report is made for purposes of tax assessment or tax valuation of the real
estate.
8. An individual appraising real property only for the purpose of providing an opinion in a judicial
proceeding or an individual providing an opinion in a judicial proceeding. An individual providing an
opinion under the exemption of this paragraph shall not represent or imply in any report or testimony that
the individual testifying is licensed or certified under this chapter.
9. A person who produces a statement that is provided to any other person concerning the estimated
value of real property through an internet website, automated valuation or other software program or
other means of comparative market analysis and who discloses that the estimate is not an appraisal.
32-3603. Registration, license or certificate use; exception
A. All real estate appraisals and appraisal reviews performed on real property in this state shall be
performed only by individuals who are registered, licensed or certified in accordance with the
requirements of this chapter. No person, other than a registered trainee appraiser or a state licensed or
state certified appraiser, may assume or use that title or any title, designation or abbreviation likely to
create the impression of registration as a trainee appraiser or licensure or certification as an appraiser by
this state.
B. No person other than a state licensed or state certified appraiser may receive a fee for a real estate
appraisal or an appraisal review of real property in this state. This subsection does not prohibit a
supervisory appraiser from remitting compensation to a registered trainee appraiser during the course of
training.
32-3605. Superintendent; duties; powers; immunity
A. The Superintendent shall adopt rules in aid or in furtherance of this chapter.
B. Superintendent shall:
1. In prescribing standards of professional appraisal practice, adopt standards that at a minimum
are equal to the standards prescribed by the appraisal standards board.
2. In prescribing criteria for certification, adopt criteria that at a minimum are equal to the
minimum criteria for certification adopted by the appraiser qualifications board.

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3. In prescribing criteria for licensing and registration, adopt criteria that at a minimum are equal
to the minimum criteria for licensing and registration adopted by the appraiser qualifications
board.
4. Further define by rule with respect to state licensed or state certified appraisers appropriate
and reasonable educational experience, appraisal experience and equivalent experience that
meets the statutory requirement of this chapter.
5. Adopt the national examination as approved by the appraiser qualifications board for state
certified appraisers.
6. Adopt the national examination as approved by the appraiser qualifications board for state
licensed appraisers.
7. Establish administrative procedures for approving or disapproving applications for registration,
licensure and certification and issuing licenses and certificates, including registration certificates.
8. Define by rule, with respect to state licensed and certified appraisers, the continuing education
requirements for the renewal of licenses or certificates that satisfy the statutory requirements
provided in this chapter.
9. Periodically review the requirements for the development and communication of appraisals
provided in this chapter and adopt rules explaining and interpreting the requirements.
10. Define and explain by rule each stage and step associated with the administrative
procedures for the disciplinary process pursuant to this chapter, including:
(a) Prescribing minimum criteria for accepting a complaint against a registered trainee
appraiser or a licensed or certified appraiser. The Superintendent may not consider a
complaint for administrative action if the complaint either:
(i) Relates to an appraisal that was completed more than five years before the
complaint was submitted to the Superintendent or more than two years after final
disposition of any judicial proceeding in which the appraisal was an issue,
whichever period of time is greater.
(ii) Is filed against a person who is a staff person of the Department of Financial
Institutions and the person is a licensed or certified appraiser and the complaint
is against the person's license or certificate and relates to the person's
performance of duties. This item does not apply to a contract investigator who is
under contract with the Department for the performance of an appraisal review as
defined by the uniform standards of professional appraisal practice. This item
does not remove the requirement that the staff person is subject to the ethics
rules section of the uniform standards of professional appraisal practice.
(b) Defining the process and procedures used in investigating the allegations of the
complaint. The Superintendent shall consolidate complaints that are filed within a sixmonth period of time if the complaints are against the same appraiser, relate to the same
appraisal and property and are filed by an entity that is subject to the mandatory reporting
provisions of the Dodd Frank Wall Street reform and consumer protection act (P.L. 111
203; 124 Stat. 1376). Complaints that are consolidated pursuant to this subdivision must
be considered and adjudicated as one complaint.
(c) Defining the process and procedures used in hearings on the complaint, including a
description of the rights of the Superintendent and any person who is alleged to have
committed the violation.
(d) Establishing criteria to be used in determining the appropriate actions for violations.
11. Communicate information that is useful to the public and appraisers relating to actions for
violations.
12. Issue decrees of censure, fix periods and terms of probation and suspend and revoke
licenses and certificates pursuant to the disciplinary proceedings provided for in section 32 3631.
13. At least monthly transmit to the appraisal subcommittee a roster listing individuals who have
received a state certificate or license in accordance with this chapter.
14. Report on the disposition of any matter referred by the appraisal subcommittee or any other
federal agency or instrumentality or federally recognized entity reporting any action of a state
licensed or state certified appraiser that is contrary to this chapter.

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15. Make a determination and finding if there exists a scarcity of state certified or state licensed
appraisers to perform appraisals in connection with federally related transactions in this state and
issue resident temporary licenses and certificates pursuant to section 32 3626.
16. Transmit the national registry fee collected pursuant to section 32 3607 to the appraisal
subcommittee.
17. Establish the fees in accordance with section 32 3607.
C. The Superintendent may accept and spend federal monies and grants, gifts, contributions and devises
from any public or private source to assist in carrying out the purposes of this chapter. These monies do
not revert to the state general fund at the end of the fiscal year.
D. The Superintendent may impose a civil penalty pursuant to section 32 3632.
32-3606. Executive director; duties
The executive director shall:
1. Receive applications for state licenses and certificates.
2. Establish the administrative procedures for processing applications for state licenses and certificates.
3. Maintain a registry of the names and addresses of people who are registered, licensed or certified
under this chapter.
4. Retain records and all application materials submitted to the board.
5. Assist the board in such other matters as the board may require.
6. Publish on the board's website a current list of supervisory appraisers and registered trainee
appraisers.
32-3607. Fees; use of credit cards
A. The board shall charge and collect fees that are sufficient to fund the activities necessary to carry out
this chapter. These include:
1. An application fee for licensure or certification of not more than four hundred dollars.
2. An application fee for a resident temporary license or certificate of not more than four hundred
dollars.
3. An examination fee in an amount to be determined by the board.
4. A fee for renewal of a license, certificate or resident temporary license or certificate of not more
than four hundred twenty-five dollars.
5. A delinquent renewal fee in addition to the renewal fee of not more than twenty-five dollars.
6. A two-year national registry fee of not to exceed the actual cost of twice the current annual
national registry fee.
7. A nonresident temporary licensure or certification fee of not more than one hundred fifty
dollars.
8. A course approval fee of not more than five hundred dollars.
9. An application fee to be a registered trainee appraiser in an amount to be determined by the
board.
B. If the appraisal subcommittee raises the national registry fee during the second year of a biennial
license or certificate, state licensed and state certified appraisers shall pay the additional national registry
fee on demand by the board. Failure to pay the additional fee within thirty days of notice by the board
subjects the license or certificate holder to a penalty of twice the amount owed but not to exceed twenty
dollars. The board shall not renew a license or certificate until all outstanding obligations of the license or
certificate holder are paid.
C. Pursuant to section 35-142, subsection I, the board may accept a credit card or debit card for the
payment of fees established by this section. The board may impose a convenience fee for payment made
pursuant to this subsection in an amount to be determined by the board.
32-3608. Board of appraisal fund
A. A board of appraisal fund is established. Except as provided in subsection C of this section, pursuant
to sections 35-146 and 35-147, the board shall deposit ten per cent of the monies in the state general
fund and deposit the remaining ninety per cent in the board of appraisal fund.
B. Except as provided in subsection C of this section, all monies deposited in the board of appraisal fund
are subject to section 35-143.01.

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C. The national registry fee collected pursuant to section 32-3607, subsection A, paragraph 6 shall be
deposited in the board of appraisal fund pending transmittal to the appraisal subcommittee. These monies
are not subject to section 35-143.01.
32-3609. Confidential records
Except as otherwise provided by law, the following records are confidential:
1. Questions contained in any examination administered by or for the board or in any examination
submitted to the board for course approval.
2. Questions asked and the answers of individual examinees, except that the board shall provide the
grades of each examinee for public inspection and copying.
3. Appraisal reports or appraisal reviews and supporting documentation deemed confidential under the
uniform standards of professional appraisal practice edition adopted by the board.
4. All documents associated with a complaint until the complaint is resolved.
32-3610. Uniform standards of professional appraisal practice; state standards; exception
The uniform standards of professional appraisal practice as published by the appraisal standards board
are the standards for the appraisal practice in this state unless the board objects.

Article 2 Registration, Licensure, and Certification
32-3611. Registration, licensure and certification process
A. Applications for original registration, licensure or certification, renewals and examinations shall be
made in writing to the executive director on forms approved by the board.
B. Appropriate fees, as fixed by the board pursuant to section 32-3607, shall accompany all applications
for original registration, licensure or certification, renewal and examination.
C. At the time of filing an application for registration, licensure or certification, each applicant shall sign a
pledge to comply with the standards set forth in this chapter and shall state that the applicant understands
the types of misconduct for which disciplinary proceedings may be initiated against a registered trainee
appraiser or a state licensed or state certified appraiser, as set forth in this chapter.
D. Except as otherwise provided in this chapter, the executive director shall require such other proof and
request such documents, through the application or otherwise, as the board deems necessary for the
interests of the public and to verify the honesty, truthfulness, reputation and competency of the applicant
and shall require that the applicant for registration, licensure or certification:
1. Be at least eighteen years of age and a citizen of the United States or a qualified alien as
defined in 8 United States Code section 1641.
2. Not have had a license or certificate denied pursuant to this chapter within one year
immediately preceding the application.
3. Not have had a license or certificate revoked pursuant to this chapter within two years
immediately preceding the application.
4. State whether or not the applicant has ever been convicted in a court of competent jurisdiction
in this or any other state of a felony or of forgery, theft, extortion or conspiracy to defraud or any
other crime involving dishonesty or moral turpitude.
E. Applications for registration, licensure or certification by persons who are charged or under indictment
for fraud involving appraisal of real property may be denied pending final disposition of the charge or
indictment. On final disposition, the board shall review the proceedings and act on the application.
32-3612. Classifications of licensure, registration and certification
The following classifications are established:
1. State certified general real estate appraisers consisting of those persons meeting the requirements for
certification relating to the appraisal or appraisal review of all types of real property.
2. State certified residential real estate appraisers consisting of those persons meeting the requirements
for certification relating to the appraisal or appraisal review of one to four residential units without regard
to value or complexity. The classification includes the appraisal for federally and nonfederally related
transactions of vacant or unimproved land that is used for one to four family purposes or for which the

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highest and best use is for one to four family purposes. This classification does not include the appraisal
of a subdivision for which a development analysis or appraisal is necessary.
3. State licensed real estate appraisers consisting of those persons meeting the requirements for
licensing relating to appraisal or appraisal review of noncomplex one to four residential units having a
value of less than one million dollars and complex one to four residential units having a value of less than
two hundred fifty thousand dollars. The classification includes the appraisal for nonfederally related
transactions of vacant or unimproved land that is used for one to four family purposes or for which the
highest and best use is for one to four family purposes. This classification does not include the appraisal
of subdivisions for which a development analysis or appraisal is necessary.
4. Registered trainee appraisers who may not appraise any property type without being subject to the
direct control and supervision of the registered trainee appraiser's designated supervisory appraiser.
5. Supervisory appraisers.
32-3613. Application and qualification requirements for issuance of license
A. An application for licensing and examination shall be made on forms as prescribed by the board and
accompanied by the required fees.
B. Those persons filing for licensing shall meet the minimum criteria for licensing established by the board
under section 32-3605, subsection B, paragraph 3.
C. No person may be a state licensed appraiser unless the person has achieved a passing grade on the
national examination approved by the appraiser qualifications board.
32-3614. Application and qualification requirements for certification
A. An application for certification and examination shall be made on forms prescribed by the board and
accompanied by the required fees.
B. Those persons filing for certification shall meet the minimum criteria for certification established by the
board under section 32-3605, subsection B, paragraph 2 and section 32-3615.
C. No person may be a state certified real estate appraiser unless the person has achieved a passing
grade on the national examination approved by the appraiser qualifications board.
D. Persons presenting evidence showing successful completion of the requirements of this section shall
be recognized as having met the qualifications as a state certified real estate appraiser.
32-3614.01. Application for registered trainee appraiser certificates
A. An application for a registered trainee appraiser certificate shall be made on a form prescribed by the
board and accompanied by the fees prescribed by section 32-3607. An applicant must complete
education requirements as outlined by the appraiser qualifications board. The applicant must submit proof
that the applicant has successfully passed the required courses that are specifically oriented to the
requirements and responsibilities of supervisory appraisers and trainee appraisers and that comply with
the specifications established by the appraiser qualifications board.
B. A criminal background check may be conducted pursuant to section 41-1750. The state board of
appraisal may charge the cost of a criminal background check to the applicant.
32-3614.02. Application for supervisory appraiser designation
A. An application for a supervisory appraiser designation shall be made on a form prescribed by the
board. The applicant must submit proof of successful completion of a course that is specifically oriented
to the requirements and responsibilities of supervisory appraisers and trainee appraisers and that
complies with the specifications established by the appraiser qualifications board.
B. A criminal background check may be conducted pursuant to section 41-1750. The state board of
appraisal may charge the cost of a criminal background check to the applicant.
32-3615. Experience requirement for licensure or certification
A. Each applicant for licensure or certification shall have experience that was acquired within ten years
immediately preceding the filing of the application for licensure or certification.
B. Each applicant for licensure or certification shall furnish under oath a detailed listing of the real estate
or other appraisal reports, review reports or filed memoranda for each year for which experience is
claimed by the applicant. On request, the applicant shall make available to the board for examination

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copies of appraisal reports which the applicant has prepared in the course of the applicant's appraisal
experience.
32-3616. Terms of license or certificate
A. Except as provided in subsection B of this section, a license or certificate issued under this chapter is
valid for two years from the date of issuance. The expiration date of the license or certificate shall appear
on the license or certificate.
B. A registration certificate issued for registered trainee appraisers shall be valid for three years from the
date of issuance. The expiration date of the registration shall appear on the registration certificate.
32-3617. Nonresident temporary licensure or certification
A. Every applicant for nonresident temporary licensure or certification under this chapter who is not a
resident of this state shall submit, with the application for nonresident temporary licensure or certification,
an irrevocable consent that service of process on the applicant may be made by delivery of the process to
the secretary of state if, in an action against the applicant in a court of this state arising out of the
applicant's activities as a nonresident temporary state licensed or state certified appraiser, the plaintiff
cannot effect, in the exercise of due diligence, personal service on the applicant.
B. A nonresident of this state who has complied with subsection A of this section may obtain a
nonresident temporary license or certificate as a nonresident temporary state licensed or state certified
appraiser by conforming to all of the requirements of this chapter relating to state licensed or state
certified appraisers.
C. A nonresident of this state who is licensed or certified in another state is entitled to nonresident
temporary licensure or certification from the board, which shall be valid until the completion of each
appraisal assignment but not for a period of more than one year from the date of issuance, if:
1. The nonresident appraiser's business in this state is of a temporary nature.
2. The nonresident appraiser applies with the board on forms prepared by the board.
3. The nonresident appraiser pays the nonresident temporary licensure or certification fee
required by the board.
D. The board shall adopt rules in furtherance of this section to avoid the abuse of the temporary practice
rights in this state.
32-3618. Reciprocity
Reciprocity shall be granted to an appraiser if all of the following conditions apply:
1. The appraiser holds a credential from a state that is in compliance with 12 United States Code sections
3310, 3332, 3333, 3335, 3338, 3339, 3341, 3342, 3345, 3346, 3347, 3348, 3350, 3351, 3353, 3354 and
3355.
2. The credential requirements for the state described in paragraph 1 of this section meet or exceed those
of this state.
3. The appraiser has completed an application for licensure or certification on a form as prescribed by the
board and submitted the fees prescribed pursuant to section 32-3607.
32-3619. Renewal of license or certificate; fees
A. Except as otherwise provided in this section and in section 32-4301, to renew a registration certificate
as a registered trainee appraiser or a license or certificate as a state licensed or state certified appraiser,
the holder of a current, valid license or certificate shall make an application and pay the prescribed fee to
the board not earlier than ninety days nor later than thirty days before the expiration date of the license or
certificate then held. With the application for renewal, the registered trainee appraiser or the state
licensed or state certified appraiser shall present evidence in the form prescribed by the board of having
completed the continuing education requirements for renewal specified in section 32-3625. The renewal
application shall be mailed to the last known address of record not more than ninety days nor less than
sixty days before the renewal date.
B. The board may accept a renewal application after the expiration date and within ninety days of the date
of expiration but shall assess a delinquent renewal fee in addition to the renewal fee.
C. An appraiser or registered trainee appraiser who fails to seek renewal within the time period specified
in subsection A or B of this section must reapply for licensure or certification and meet all of the
requirements of this chapter.
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D. An appraiser or registered trainee appraiser shall not engage in, advertise or purport to engage in real
estate appraisal activity in this state after a license or certificate has expired and before the renewal of the
expired license or certificate.
E. Notwithstanding section 41-1092.11, a license or certificate expires on its expiration date.
32-3620. Basis for denial of a license or certificate
A. The board may deny the issuance of a license or certificate as a registered trainee appraiser, a
supervisory appraiser or a state licensed or state certified appraiser to an applicant who has been
convicted of a felony or on any of the grounds prescribed in this chapter.
B. To assist in determining whether grounds exist to deny the issuance of a license or certificate to an
applicant, the board may require a criminal background check including the fingerprinting of every
applicant for an original license and certificate. The criminal background check may be conducted
pursuant to section 41-1750 or in any other manner deemed suitable by the board. The board may
charge the cost of each criminal background check to the applicant.
C. A person who is denied the issuance of a license or certificate may request, and if requested shall
receive, a hearing in accordance with title 41, chapter 6, article 10.
32-3621. Addresses; telephone numbers; notification of change
A. Each registered trainee appraiser or state licensed or state certified appraiser shall advise the board of
the address of the person's principal place of business and all other addresses at which the person is
currently engaged in the business of preparing real property appraisal reports.
B. Every registered trainee appraiser or state licensed or state certified appraiser shall notify the board of
the person's current residence address. Residence addresses on file with the board are exempt from
disclosure as public records.
C. Every registered trainee appraiser or state licensed or state certified appraiser shall provide the
person's e-mail address if one exists and a daytime telephone number to the board.
D. If a registered trainee appraiser or a state licensed or state certified appraiser changes the person's
place of business or residence, e-mail address or daytime telephone number, the person shall give the
board written notification of the change within ten days after the change.
32-3622. Licenses and certificates
A. A license or certificate issued under this chapter shall be signed on behalf of the board and shall bear
the license or certificate number assigned by the board.
B. Each state licensed or state certified appraiser shall place the appraiser's license or certificate number
adjacent to or immediately below the title "state licensed appraiser" or "state certified appraiser" and the
number shall be included in an appraisal report or in a contract or other instrument used by the license or
certificate holder in conducting appraisal activities.
32-3623. Use of term
A. The term "state licensed appraiser" or "state certified appraiser" may only be used to refer to
individuals who hold the license or certificate and may not be used after or immediately in connection with
the name or signature of a firm, partnership, corporation or group or in such a manner that it might be
interpreted as referring to a firm, partnership, corporation or group or anyone other than the individual
holder of the license or certificate.
B. A license or certificate shall not be issued under this chapter to a corporation, partnership, firm or
group. This subsection shall not be construed to prevent a state licensed or state certified appraiser from
signing an appraisal report on behalf of a corporation, partnership, firm or group.
32-3624. Professional corporations and partnerships
A corporation, partnership or other business entity may provide appraisal services in connection with
transactions related to this chapter if the appraisal is prepared by individuals licensed or certified in
accordance with this chapter. An individual who is not a state licensed or state certified appraiser may
assist in the preparation of an appraisal if both of the following apply:
1. The assistant is under the direct supervision of a state licensed or state certified appraiser.
2. The final appraisal document is approved and signed by an individual who is licensed or
certified.
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32-3625. Continuing education
A. As a prerequisite to renewal of a license or certificate, a state registered trainee appraiser or a licensed
or state certified appraiser shall present evidence satisfactory to the board of having met the continuing
education requirements of either subsection B or C of this section.
B. The basic continuing education requirement for renewal of a license or certificate is the completion by
the applicant, during the immediately preceding term of the license or certificate, of courses or seminars
that are approved by the board.
C. An applicant for reregistering, relicensing or recertification may satisfy all or part of the continuing
education requirements by presenting evidence of the following, which shall be approved by the board:
1. Completion of an education program of study determined by the board to be equivalent, for
continuing education purposes, to courses approved by the board pursuant to subsection B of
this section.
2. Participation other than as a student in educational processes and programs that are approved
by the board and that relate to appropriate appraisal theory, practices or techniques, including
teaching, program development and preparation of textbooks, monographs, articles and other
instructional materials, not to exceed fifty per cent of an applicant's continuing education
requirements and not for the same course in consecutive renewal periods.
D. The board shall adopt rules to assure that persons renewing their licenses or certificates as state
licensed or state certified appraisers follow practices and techniques that provide a high degree of service
and protection to those members of the public with whom they deal in the professional relationship under
the authority of the license or certificate. The rules shall include the following:
1. Policies and procedures for obtaining board approval of courses and instruction pursuant to
subsection B of this section.
2. Standards, policies and procedures to be applied by the board in evaluating an applicant's
claims of equivalency in accordance with subsection C of this section.
3. Standards, monitoring methods and systems for recording attendance to be employed by
course sponsors as a prerequisite to board approval of courses for credit.
E. In adopting rules pursuant to subsection D, paragraph 1 of this section, the board shall give
consideration to courses of instruction, seminars and other appropriate appraisal educational courses or
programs previously or hereafter developed by or under the auspices of professional appraisal
organizations and utilized by those associations for purposes of designation, or indicating compliance
with the continuing education requirements of such organizations. No person who offers these courses
may discriminate in the opportunity to participate in these courses on the basis of membership or
nonmembership in an appraisal organization.
F. No amendment or repeal of a rule adopted by the board pursuant to this section may operate to
deprive a state registered trainee appraiser or a state licensed or state certified appraiser of credit toward
renewal of a license or certificate for any course of instruction either completed by the applicant or
enrolled in by the applicant before the amendment or repeal of the rule that would have qualified for
continuing education credit under the rule as it existed before the repeal or amendment.
G. A license or certificate as a state registered trainee appraiser or a state licensed or state certified
appraiser that has been suspended as a result of disciplinary action by the board shall not be reinstated
unless the applicant presents evidence of completion of the continuing education required by this chapter.
H. A license or certificate that has been revoked by the board shall not be reinstated unless the applicant
successfully completes the appropriate requirements of the appraisal qualifications board, including
education and passage of the current national examination.
32-3626. Scarcity determination; resident temporary licenses and certificates; exemption
A. No later than November 1 of each year, the board shall determine and make a finding whether there is
a scarcity of state certified or state licensed appraisers in an area within the state to perform appraisals in
federally related transactions.
B. In determining whether a scarcity exists, the board shall follow procedures in accordance with the
provisions governing scarcity in 12 United States Code section 3348 and regulations adopted pursuant to
that section as of September 30, 1992.
C. If the board makes a finding of scarcity, within fifteen days after the finding, the board shall apply to the
appropriate federal agency for a temporary waiver of the state certification or licensing requirements.
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D. If a waiver request has been approved by the federal agency authorized to issue waivers, the board
may thereafter issue resident temporary licenses or certificates to applicants consistent with the reduction
in application requirements of this chapter for licenses and certificates as authorized by the waiver. A
resident temporary license or certificate shall be subject to all provisions of this chapter not inconsistent
with the provisions of the waiver.
E. A person obtaining a resident temporary license or certificate under this section is required to comply
with all of the provisions of this chapter except for those provisions of this chapter for which a temporary
waiver has been approved and shall indicate on all appraisals performed by the person that the appraisal
is not an appraisal done by a state certified or state licensed appraiser and the person performing the
appraisal is a resident temporary license or certificate holder. A person holding a resident temporary
license or certificate may perform appraisals only in areas within the state where it has been determined
by the board that a scarcity exists.
F. The board is exempt from title 41, chapter 6, article 10 in making the determination and finding and in
issuing resident temporary licenses and certificates in accordance with the waiver in subsection D of this
section and section 32-3605, subsection B, paragraph 14.
32-3627. Inactive license or certificate status; reactivation application; renewal application and
fee; continuing education
A. Any license or certificate holder may request that the license or certificate be placed on inactive status
by filing with the board an application that includes all of the following:
1. The license or certificate holder's name.
2. The license or certificate number.
3. A request for inactive status.
B. The period a license or certificate is on inactive status under this section may not exceed two years.
C. A license or certificate holder who is on inactive status shall not do either of the following:
1. Represent that the license or certificate holder is an active appraiser licensed or certified in this
state.
2. Perform real estate appraisals or appraisal reviews on real estate in this state.
D. A license or certificate holder on inactive status under this section must file with the board an
application for reactivation of the license or certificate before resuming real estate appraisal activity.
E. To return to active status, an inactive license or certificate holder shall do both of the following:
1. File with the board an application for reactivation of the license or certificate.
2. Provide evidence of completion of the required continuing education that the license or
certificate holder would have been required to meet during the period when the license or
certificate holder's license or certificate was on inactive status.
F. If the holder of an inactive license or certificate under this section does not file an application for
reactivation within a two year period, that person must reapply for licensure or certification pursuant to the
requirements of this chapter.
G. A license or certificate holder who is on inactive status pursuant to this section remains on inactive
status until the board approves the application for reactivation of the license or certificate.
H. The board may take disciplinary or remedial action against a license or certificate holder who is on
inactive status pursuant to this section.
I. A license or certificate holder who places the holder's license or certificate on inactive status must pay
the renewal fee and complete an application for renewal as prescribed in section 32-3619. A license or
certificate holder on inactive status is not required to provide evidence of completion of the continuing
education requirements until the application for reactivation is filed pursuant to subsection E of this
section.
32-3628. Inactive license or certificate status during military duty; reactivation application;
renewal application and fee; continuing education
A. A license or certificate holder who is ordered to active military duty with the United States armed forces
may request that the license or certificate be placed on inactive status by filing with the board an
application that includes all of the following:
1. The license or certificate holder's name.
2. The license or certificate number.
3. The date that the active military duty begins.
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4. A request for inactive status.
B. The license or certificate is deemed to be on inactive status while the license or certificate holder is on
active military duty, but the period of inactive status may not exceed three years.
C. A license or certificate holder who is on inactive status pursuant to this section shall not do either of the
following:
1. Represent that the holder is an active appraiser licensed or certified in this state.
2. Perform real estate appraisals or appraisal reviews on real estate in this state.
D. A license or certificate holder on inactive status must file with the board an application for reactivation
of the license or certificate within one hundred eighty days after returning home from active military duty.
E. If the holder of an inactive license or certificate timely files an application for reactivation of the license
or certificate, the license or certificate is returned to active status on the board's approval of the
application for reactivation. The time period for completion of the continuing education requirements that
the license or certificate holder would otherwise have been required to meet during the period when the
license or certificate was on inactive status is extended for a period not to exceed ninety days after return
from active military duty. The license or certificate holder must submit proof of completion of any
continuing education requirements to the board no later than one hundred twenty days after completion.
F. If the holder of an inactive license or certificate under this section does not make a timely application
for reactivation as required by subsection D of this section, the holder must reapply for licensure or
certification meeting all of the requirements of this chapter.
G. A license or certificate holder who is on inactive status pursuant to this section remains on inactive
status until the board approves the application for reactivation of the license or certificate.
H. The holder of an inactive license or certificate applying for reactivation of the license or certificate
under this section shall include with the application for reactivation a copy of the documentation from the
armed forces showing the period of time that the holder of the inactive license or certificate was on active
military duty.
I. Any license or certificate holder who places the holder's license or certificate on inactive status under
this section must pay the renewal fee prescribed in section 32-3607 and complete an application for
renewal pursuant to section 32-3619. A license or certificate holder on inactive status pursuant to this
section who files an application for reactivation is required to provide evidence of completion of the
continuing education requirements pursuant to subsection E of this section.
J. For the purposes of this section, active military duty does not include service persons performing
weekend drill and annual training.

Article 3 Regulation
32-3631. Disciplinary proceedings
A. The rights of an applicant or holder under a license or certificate as a registered trainee appraiser or a
state licensed or state certified appraiser may be revoked or suspended or the holder of the license or
certificate may otherwise be disciplined in accordance with this chapter on any of the grounds set forth in
this section. The board may investigate the actions of a registered trainee appraiser or a state licensed or
state certified appraiser and may revoke or suspend the rights of a license or certificate holder or
otherwise discipline a registered trainee appraiser or a state licensed or state certified appraiser for any of
the following acts or omissions:
1. Procuring or attempting to procure a license or certificate pursuant to this chapter by knowingly
making a false statement, submitting false information, refusing to provide complete information
in response to a question in an application for a license or certificate or committing any form of
fraud or misrepresentation.
2. Failing to meet the minimum qualifications established by this chapter.
3. Paying or offering to pay money or other considerations other than as provided by this chapter
to any member or employee of the board to procure a license or certificate under this chapter.
4. A conviction, including a conviction based on a plea of guilty, of a crime that is substantially
related to the qualifications, functions and duties of a person developing appraisals and
communicating appraisals to others, or a conviction for any felony or any crime involving moral
turpitude.

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5. An act or omission involving dishonesty, fraud or misrepresentation with the intent to
substantially benefit the license or certificate holder or another person or with the intent to
substantially injure another person.
6. Violation of any of the standards of the development or communication of appraisals as
provided in this chapter.
7. Negligence or incompetence by the state licensed or state certified appraiser in developing an
appraisal, in preparing an appraisal report or in communicating an appraisal.
8. Wilfully disregarding or violating any of the provisions of this chapter or the rules of the board
for the administration and enforcement of this chapter.
9. Accepting an appraisal assignment if the employment itself is contingent on the appraiser
reporting a predetermined estimate, analysis or opinion or if the fee to be paid is contingent on
the opinion, conclusion or value reached or on the consequences resulting from the appraisal
assignment.
10. Violating the confidential nature of any records to which the registered trainee appraiser or the
state licensed or state certified appraiser gains access through employment or engagement as a
registered trainee appraiser or an appraiser.
11. Entry of a final civil judgment against the person on grounds of fraud, misrepresentation or
deceit in the making of any appraisal.
B. In a disciplinary proceeding based on a civil judgment, a registered trainee appraiser or state licensed
or state certified appraiser shall be afforded an opportunity to present matters in mitigation and
extenuation.
C. The board may issue subpoenas for the attendance of witnesses and the production of books, records,
documents and other evidence necessary and relevant to an investigation or hearing.
D. The lapsing or suspension of a license or certificate by operation of law or by order or decision of the
board or a court of law, or the voluntary surrender of a license or certificate by a license or certificate
holder, shall not deprive the board of jurisdiction to do any of the following within twenty-four months after
the expiration of the license or certificate pursuant to section 32-3616:
1. Proceed with any investigation of or action or disciplinary proceeding against the license or
certificate holder.
2. Render a decision suspending or revoking the license or certificate or denying the renewal or
right of renewal of the license or certificate.
32-3632. Hearing and judicial review
A. The hearing on the charges shall be at a time and place prescribed by the board and shall be in
accordance with title 41, chapter 6, article 10.
B. If the board determines that a state licensed or state certified appraiser is guilty of a violation of this
chapter, it shall prepare a finding of fact and take disciplinary or remedial action.
C. Except as provided in section 41-1092.08, subsection H, any final decision or order of the board may
be appealed to the superior court pursuant to title 12, chapter 7, article 6.
32-3633. Undue influence; classification
A person who induces or influences the actions of an appraiser for purposes of securing an appraisal that
is grossly misleading, or fraudulent, is guilty of a class 6 felony.
32-3634. Prohibition against discrimination
If appraisal users require specific appraiser qualifications or experience for certain transactions necessary
to carry out or to meet the responsibilities of the appraisal user, these requirements shall be related to the
special skills that are required of an individual in connection with the specific appraisal assignment and
shall not exclude an appraiser for consideration for such assignment solely by membership or lack of
membership in any particular professional appraisal organization or association.
32-3635. Standards of practice
A. A registered trainee appraiser or a state licensed or state certified appraiser shall comply with the
standards of professional appraisal practice adopted by the board.
B. An appraisal or appraisal report shall not be issued by a real estate appraiser unless it meets the
appraisal standards established by this chapter and rules adopted pursuant to this chapter.
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C. An appraisal review report shall clearly indicate the nature of the review process undertaken and shall
separate the review function from any other functions.
D. All federally related appraisals shall be in writing.
32-3636. Contingent fees
A state licensed or state certified appraiser may not accept a fee for an appraisal assignment that is
contingent on the appraiser reporting a predetermined estimate, analysis or opinion or that is contingent
on the opinion, conclusion or value reached or on the consequences resulting from the appraisal
assignment.
32-3637. Retention of records; definition
A. A state licensed or state certified appraiser shall retain a work file for at least five years after
preparation of the work file or at least two years after final disposition of any judicial proceeding in which
the appraiser provided testimony related to the work file, whichever period of time is greater.
B. A state licensed or state certified appraiser shall do either of the following:
1. Have custody of the appraiser's work file.
2. Make appropriate work file retention, access and retrieval arrangements with the party having
custody of the work file.
C. The board may inspect all records required to be maintained under this chapter by the state licensed
or state certified appraiser on reasonable notice to the appraiser.
D. For the purposes of this section, "work file" includes documentation that is necessary to support an
appraiser's analyses, opinions and conclusions and that demonstrates compliance with the uniform
standards of professional appraisal practice.
32-3638. Violation; classification
Any person who performs a real estate appraisal or appraisal review, who is not licensed or certified
under this chapter and who knowingly assumes or uses any title, designation or abbreviation likely to
create the impression of licensure or certification by this state or any person who knowingly provides false
or fraudulent information to the board is guilty of a class 1 misdemeanor.
32-3639. Damages; injunctive relief
If the board has a reasonable basis to believe, after investigation, that any person is violating any
provision of this chapter, the board may bring an action in superior court for appropriate injunctive or other
equitable relief, damages sustained and taxable costs and reasonable attorney fees.
32-3640. Prohibition; indemnification agreement
A. Any person, party or entity who hires, engages or communicates with an appraiser directly or through
an agent shall not require or attempt to require the appraiser to sign any indemnification agreement that
would hold harmless the hiring person, party or entity, its owners, agent's employees or independent
contractors from any liability, damage, loss or claim arising from the services performed by the person,
party or entity, its owners, agent's employees or independent contractors.
B. This section does not limit liability for services performed by the appraiser.

Article 4 Property Tax Agents
32-3651. Definitions
In this article, unless the context otherwise requires:
1. "Analysis" means the review of a property valuation or legal classification established by a county
assessor in the representation of a person in appealing the property valuation to the county assessor.
2. "Appraisal" means the development of real or personal property value or legal classification opinions or
conclusions.
3. "Board" means the state board of appraisal.
4. "Property tax agent" means an individual who is designated by a person or is an employee of an entity
designated as an agent pursuant to section 42-16001, who acts on behalf of a person who owns, controls
or possesses property valued by a county assessor or the department of revenue and who receives a fee
for the analysis of any matter relating to the review of the valuation or legal classification of the person's
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property before the assessor, the county or state board of equalization or the department of revenue.
Property tax agent does not include a person who is admitted to practice law in this state, an employee of
the person owning, controlling or possessing the property or an employee of an entity designated
pursuant to section 42-16001, if such employee is performing a secretarial, clerical or administrative
support function.
32-3652. Registration; renewal; fees
A. An individual who wishes to act as a property tax agent shall apply for registration by submitting to the
board a completed application form prescribed by the board with the initial registration fee. The applicant
shall also file with the board an affidavit stating whether the applicant has been convicted of a felony or
any misdemeanor involving dishonesty or moral turpitude in this or any other state within the last ten
years. The board may review the affidavit and issue or deny the registration based on its findings.
B. Except as provided in section 32-4301, registration is valid for two years. An individual may renew a
registration by submitting to the board a renewal form prescribed by the board with the renewal fee on or
before the date the registration expires.
C. An appraiser licensed or certified pursuant to this chapter may register and renew registration as a
property tax agent without paying the fee prescribed by this section.
D. The board shall issue a certificate of registration to an individual, if the individual complies with this
section and the individual is not prohibited from registering pursuant to section 32-3654.
E. A person shall not act as a property tax agent if the person is not registered pursuant to this section.
F. The board shall collect from each individual a fee of:
1. Two hundred dollars for an initial registration.
2. One hundred dollars for a renewal.
3. Five dollars for a duplicate registration certificate.
G. The board shall deposit, pursuant to sections 35-146 and 35-147, monies collected pursuant to
subsection F of this section in the board of appraisal fund.
32-3653. Property tax agent conduct
A property tax agent:
1. Shall not knowingly misrepresent any information or act in a fraudulent manner.
2. Shall not prepare documents or provide evidence in a property valuation or legal classification appeal
unless the agent is authorized by the property owner to do so and any required agency authorization form
has been filed.
3. Shall not knowingly submit false or erroneous information in a property valuation or legal classification
appeal.
4. Shall use appraisal standards and methods that are adopted by the board when the agent submits
appraisal information in a property valuation or legal classification appeal.
32-3654. Disciplinary actions
A. On the complaint of any person or on its own motion, the board shall investigate any suspected
violation of this article by a property tax agent. If the board finds a violation it may issue a letter of
concern.
B. If the board finds that the property tax agent committed any of the following violations, it shall revoke or
suspend the agent's registration:
1. Secured registration by fraud or deceit.
2. Committed an act or is responsible for an omission involving fraud or knowing
misrepresentation with the intent to obtain a benefit.
3. Knowingly violated section 32-3653.
C. The board shall:
1. Suspend the agent's registration for not less than six months on the first finding of a violation
pursuant to subsection B of this section.
2. Suspend the agent's registration for not less than twelve months on the second finding of a
violation pursuant to subsection B of this section.
3. Revoke the agent's registration on a third or subsequent finding of a violation pursuant to
subsection B of this section.

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D. The board shall not impose discipline until the agent has been provided an opportunity for a hearing
before the board pursuant to title 41, chapter 6, article 10. The board shall notify the agent of the charges
and the date and time of the hearing. The notice may be personally served or sent by certified mail to the
agent's last known address. Except as provided in section 41-1092.08, subsection H, the final decision of
the board is subject to judicial review pursuant to title 12, chapter 7, article 6.
E. The board shall not renew an agent's registration during the time the registration is suspended or
revoked.
32-3655. Rules
The board may adopt rules for the purpose of administering this article.
32-3656. Confidential records
Except as otherwise provided by law, all documents associated with a complaint pursuant to this article
are confidential until the complaint is resolved.

Article 5 Appraisal Management Companies
32-3661. Definitions
In this article, unless the context otherwise requires:
1. "Appraisal" means the act or process of developing an opinion of the value of real property in
conformance with the uniform standards of professional appraisal practice published by the appraisal
foundation, or any other definition used in state or federal laws.
2. "Appraisal management company" means a corporation, partnership, sole proprietorship, subsidiary or
other business entity that directly or indirectly performs appraisal management services, regardless of the
use of the term "appraisal management company", "mortgage technology provider", "lender processing
services", "lender services", "loan processor", "mortgage services", "real estate closing services provider",
"settlement services provider", "vendor management company" or any other term, and that does any of
the following:
(a) Administers an appraiser panel of independent contract appraisers to perform real property
appraisal services in this state for clients.
(b) Receives requests for real property appraisal services from clients and, for a fee paid by the
client, enters into an agreement with one or more independent appraisers to perform the real
property appraisal services contained in the request.
(c) Otherwise serves as a third party liaison of appraisal management services between clients
and appraisers.
3. "Appraisal management services" means the process of receiving a request for the performance of real
property appraisal services from a client and, for a fee paid by the client, entering into an agreement with
one or more independent appraisers who are part of an appraiser panel to perform the real property
appraisal services contained in the request.
4. "Appraisal review" means the act or process of developing and communicating an opinion about the
quality of another appraiser's work that was performed as part of an appraisal assignment, but does not
include an examination of an appraisal for grammatical, typographical or other similar errors that do not
communicate an opinion related to the appraiser's data collection, analysis, opinions, conclusions,
estimate of value or compliance with the uniform standards of professional appraisal practice.
5. "Appraiser" means a person who is licensed or certified as an appraiser pursuant to this chapter and
who performs valuation services competently and in a manner that is independent, impartial and
objective.
6. "Appraiser panel" means a group of independent appraisers that has been selected by an appraisal
management company to perform real property appraisal services for the appraisal management
company.
7. "Client" means a person that contracts with, or otherwise enters into an agreement with, an appraisal
management company for the performance of real property appraisal services.
8. "Controlling person" means any of the following:
(a) An owner, officer or director of a corporation, partnership or other business entity seeking to
offer appraisal management services in this state.
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(b) An individual who is employed, appointed or authorized by an appraisal management
company and who has the authority to enter into a contractual relationship with clients for the
performance of appraisal management services and to enter into agreements with independent
appraisers for the performance of real property appraisal services.
(c) An individual who possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of an appraisal management company.
9. "Real property appraisal services" means the practice of developing an opinion of the value of real
property in conformance with the uniform standards of professional appraisal practice published by the
appraisal foundation.
10. "Relocation management company" means a business entity whose exclusive business services are
not for mortgage purposes and include the relocation of employees as an agent or contractor for the
employer or the employer's agent for the purposes of determining an anticipated sales price, as defined
by the worldwide employee relocation council, of the residence of an employee being relocated by the
employer in the course of its business.
11. "Uniform standards of professional appraisal practice" means the uniform standards of professional
appraisal practice promulgated by the appraisal foundation and adopted pursuant to this chapter.
32-3662. Registration
A. A person shall not directly or indirectly engage or attempt to engage in business as an appraisal
management company, directly or indirectly perform or attempt to perform appraisal management
services or advertise or hold itself out as engaging in or conducting business as an appraisal
management company without first obtaining a registration issued by the board pursuant to this article,
regardless of the entity's use of appraisal management company, mortgage technology company or any
other name.
B. A person who wishes to be registered as an appraisal management company in this state must file a
written application with the board on a form prepared and furnished by the board and pay a fee in an
amount to be determined by the board. The registration required by subsection A shall include:
1. The name, residence address, business address and telephone number of the applicant and
the location of each principal office and branch office at which the appraisal management
company will conduct business in this state.
2. The name under which the applicant will conduct business as an appraisal management
company.
3. The name, residence address, business address and telephone number of each person who
will have an interest in the appraisal management company as a principal, partner, officer,
director or trustee, specifying the capacity and title of each person.
4. If the person seeking registration is a corporation that is not domiciled in this state, the name
and contact information for the company's agent for service of process in this state.
5. A certification that the person seeking registration has a system and process in place to verify
that a person being added to the appraiser panel for the appraisal management company's
appraisal management services in this state holds a license or certification in good standing in
this state.
6. A certification that the person seeking registration has a system in place to review the work of
all independent appraisers that are performing real property appraisal services for the appraisal
management company on a periodic basis to confirm that the real property appraisal services are
being conducted in accordance with uniform standards of professional appraisal practice.
7. A certification that the person maintains a detailed record of each service request that it
receives and the independent appraiser that performs the real property appraisal services for the
appraisal management company.
8. A certification that the person seeking registration has a system in place to train those who
select individual appraisers for real property services in this state, to ensure that the selectors
have appropriate training in placing appraisal assignments.
9. An irrevocable consent to service of process.
10. Any other information required by the board deemed reasonable in scope and content and
necessary for the implementation and administration of this chapter.

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32-3663. Exemptions
This article does not apply to:
1. A department or unit within a financial institution that is subject to direct regulation by an agency of the
United States government or of this state and that receives requests for the performance of real estate
appraisals from the financial institution and then assigns such requests to an appraiser who is part of the
financial institution's appraiser panel.
2. A corporation, partnership, sole proprietorship, subsidiary or other business entity that employs real
estate appraisers exclusively on an employer and employee basis for the performance of all real property
appraisal services in the normal course of its business and that is responsible for ensuring that the real
property appraisal services being performed by its employees are being performed in accordance with
uniform standards of professional appraisal practice and federal and state law.
3. A relocation management company in the course of employee relocation pursuant to its relocation
policy.
32-3664. Registration forms
An applicant for initial and renewal registration as an appraisal management company shall submit to the
board an application on a form prescribed by the board.
32-3665. Expiration of registration
An initial registration granted by the board pursuant to this article is valid for one year from the date on
which it is issued. Registration renewals are valid for two years.
32-3666. Consent to service of process
Each entity applying for registration as an appraisal management company shall complete and execute
an irrevocable consent to service of process form as prescribed by the board.
32-3667. Fee; bond
A. The board shall establish the fee for appraisal management company registration by rule.
B. The appraisal management company is required to show proof of a surety bond of twenty thousand
dollars.
32-3668. Owner requirements
A. An appraisal management company applying for registration may not be owned by a person or have
any principal of the company who has had any financial, real estate or mortgage lending industry license
or certificate refused, denied, canceled, revoked or voluntarily surrendered in this state or in any other
state. This requirement may be waived by appeal and at the discretion of the board.
B. Each person that owns, is an officer of or has a financial interest in an appraisal management
company in this state shall:
1. Be of good moral character.
2. Submit to a criminal background check conducted pursuant to section 41-1750. The board may
charge the cost of a criminal background check to the applicant.
3. Certify to the board that the person has never had any financial, real estate or mortgage
lending industry license or certificate refused, denied, canceled, revoked or voluntarily
surrendered in this state or in any other state. This requirement may be waived by appeal and at
the discretion of the board.
32-3669. Controlling person
A. Each appraisal management company applying to the board for registration in this state shall
designate one controlling person that will be the main contact for all communication between the board
and the appraisal management company.
B. To serve as a controlling person of an appraisal management company, a person shall:
1. Certify to the board that the person has never had any financial, real estate or mortgage
lending industry license or certificate issued by this state, or any other state, refused, denied,
canceled, revoked or voluntarily surrendered. This requirement may be waived by appeal and at
the discretion of the board.
2. Be of good moral character.
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3. Submit to a criminal background check conducted pursuant to section 41-1750. The board may
charge the cost of a criminal background check to the applicant.
32-3670. Employee requirements
Any employee of an appraisal management company, or any person working on behalf of an appraisal
management company, who has the responsibility of selecting independent appraisers for the
performance of real property appraisal services for the appraisal management company or providing
appraisal review services on a completed appraisal, shall be appropriately trained and qualified in
compliance with this chapter.
32-3671. Agreements with independent appraisers; limitations
An appraisal management company registered in this state pursuant to this article may not enter into
contracts or agreements with an independent appraiser for the performance of real property appraisal
services in this state unless that person is licensed or certified in good standing with the board.

32-3672. Annual certifications
A. Each appraisal management company seeking to be registered in this state shall certify to the board
on an annual basis on a form prescribed by the board that the appraisal management company has a
system and process in place to verify that a person being added to the appraiser panel of the appraisal
management company holds a license or certificate in good standing in this state pursuant to the board.
B. Each appraisal management company seeking to be registered in this state shall certify to the board
on an annual basis that it has a system in place to review the quality of appraisals of all independent
appraisers that are performing real property appraisal services for the appraisal management company
on a periodic basis to confirm that the real property appraisal services are being conducted in accordance
with uniform standards of professional appraisal practice.
C. Each appraisal management company seeking to be registered shall certify to the board on an annual
basis that it maintains a detailed record of each service request that it receives and the name of the
independent appraiser that performs the real property appraisal services for the appraisal management
company. An appraisal management company shall maintain a detailed record for the same time period
that an appraiser is required to maintain an appraisal record for the same real property appraisal activity.
D. Each appraisal management company seeking to be registered shall certify to the board on an annual
basis that it has a system in place to train those who select individual appraisers for real property services
in this state, to ensure that the selectors have appropriate training in placing appraisal assignments.
32-3673. Disclosure of fees
A. The appraisal management company shall not prohibit the appraiser from reporting in the appraisal
report the fee paid to the appraiser.
B. The appraiser shall disclose the fee paid for an appraisal report ordered by an appraisal management
company in the scope of work section in the appraisal report.
32-3674. Appraiser independence; prohibitions
A. Any employee, director, officer or agent of an appraisal management company registered pursuant to
this article shall not influence or attempt to influence the development, reporting or review of an appraisal
through coercion, extortion, collusion, compensation, inducement, intimidation, bribery or any other
manner, including:
1. Withholding or threatening to withhold timely payment for an appraisal.
2. Withholding or threatening to withhold future business for an independent appraiser or
demoting or terminating, or threatening to demote or terminate, an independent appraiser.
3. Expressly or impliedly promising future business, promotions or increased compensation for an
independent appraiser.
4. Conditioning the request for an appraisal service or the payment of an appraisal fee or salary
or bonus on the opinion, conclusion or valuation to be reached or on a preliminary estimate or
opinion requested from an independent appraiser.

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5. Requesting that an independent appraiser provide an estimated, predetermined or desired
valuation in an appraisal report or provide estimated values or comparable sales at any time
before the independent appraiser's completion of an appraisal service.
6. Providing to an independent appraiser an anticipated, estimated, encouraged or desired value
for a subject property or a proposed or target amount to be loaned to the borrower, except that a
copy of the sales contract for purchase transactions may be provided.
7. Providing to an independent appraiser, or any entity or person related to the appraiser, stock or
other financial or nonfinancial benefits.
8. Allowing the removal of an independent appraiser from an appraiser panel, without prior written
notice to the appraiser.
9. Obtaining, using or paying for a second or subsequent appraisal or ordering an automated
valuation model in connection with a mortgage financing transaction, unless there is a reasonable
basis to believe that the initial appraisal was flawed or tainted and the basis is clearly and
appropriately noted in the loan file or unless the appraisal or automated valuation model is done
pursuant to a bona fide prefunding or postfunding appraisal review or quality control process.
10. Engaging in any other act or practice that impairs or attempts to impair an appraiser's
independence, objectivity or impartiality.
B. An appraisal fee offered or paid may not be based on the predetermined value or range of value of the
subject property or the amount of the transaction price.
C. Subsections A and B do not prohibit an appraisal management company from requesting that an
independent appraiser either:
1. Provide additional information about the basis for a valuation.
2. Correct objective factual errors in an appraisal report.
32-3675. Payment
Except in cases of breach of contract or substandard performance of services, each appraisal
management company shall make payment to an independent appraiser for the completion of an
appraisal or valuation assignment within forty-five days after the date on which the independent appraiser
transmits or otherwise provides the completed appraisal or valuation study to the appraisal management
company or its assignee.
32-3676. Appraisal reports; alteration; use
An appraisal management company shall not:
1. Alter, modify, revise or otherwise change a completed appraisal report submitted by an independent
appraiser, including removing the signature of the appraiser.
2. Use an appraisal report submitted by an independent appraiser for any purpose other than the
intended use stated in the report.
32-3677. Adjudication of disputes
A. Except within the first sixty days after an independent appraiser is first added to the appraiser panel of
an appraisal management company, an appraisal management company shall not remove an appraiser
from its appraiser panel, or otherwise refuse to assign requests for real property appraisal services to an
independent appraiser, without notifying the appraiser in writing of the reasons for the appraiser being
removed from the appraiser panel of the appraisal management company.
B. An independent appraiser that is removed from the appraiser panel of an appraisal management
company for alleged illegal conduct, violation of the uniform standards of professional appraisal practice
or violation of state licensing standards may file a complaint with the board for a review of the decision of
the appraisal management company, except that in no case shall the board make any determination
regarding the nature of the business relationship between the appraiser and the appraisal management
company that is unrelated to the actions specified in subsection A.
C. If an independent appraiser files a complaint against an appraisal management company pursuant to
subsection B, the board shall adjudicate the complaint within a reasonable time.
D. If after opportunity for a hearing and review, the board determines that an independent appraiser did
not commit a violation of law, a violation of the uniform standards of professional appraisal practice or a
violation of state licensing standards, the board shall order that the appraiser be added to the appraiser
panel of the appraisal management company that was the subject of the complaint without prejudice. The
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board shall furnish the appraisal management company with all written documentation and investigation
records that support the board's findings.
32-3678. Enforcement
The board may censure an appraisal management company, conditionally or unconditionally suspend or
revoke any registration issued under this article or impose civil penalties not to exceed fifteen thousand
dollars per violation if, in the opinion of the board, an appraisal management company is attempting to
perform, has performed or has attempted to perform any of the following acts:
1. Committing any act in violation of this article.
2. Violating any rule adopted by the board in the interest of the public and consistent with this article.
3. Knowingly making or causing to be made to the board any false representation of material fact.
4. Suppressing or withholding from the board any information that the applicant possesses and that, if
submitted by the applicant, would have rendered the applicant ineligible to be registered pursuant to rules
adopted by the board.
5. Violating the federal financial institutions reform, recovery and enforcement act of 1989 (P.L. 101-73;
103 Stat. 183).
32-3679. Disciplinary hearings
A. The board may conduct disciplinary proceedings in accordance with title 41, chapter 6, article 10.
B. Before censuring any registrant, or suspending or revoking any registration, the board shall notify the
registrant in writing of any charges made at least forty-five days before the date set for the hearing and
shall afford the registrant an opportunity to be heard in person or by counsel.
C. The written notice shall be satisfied by personal service on the controlling person of the registrant or
the registrant's agent for service of process in this state or by sending the notice by certified mail to the
controlling person of the registrant to the registrant's address on file with the board.
D. The hearing shall be at a time and place prescribed by the board. Any reasonable request for a delay
of a hearing shall not exceed ninety days.
E. The board may make findings of fact and shall deliver or mail the findings to the registrant charged with
a violation of this article.
32-3680. Rule making authority
The board shall adopt rules that are reasonably necessary to implement, administer and enforce this
article, including rules for obtaining copies of appraisals and other documents necessary to audit
compliance with this article and rules requiring a surety bond to be posted with each application.

ARIZONA ADMINISTRATIVE CODE, Title
Occupations, Chapter 46. Board of Appraisal.

4.

Professions

and

Article 1. General Provisions
R4-46-101. Definitions
In these rules, unless the context otherwise requires:
“Arizona or State Certified General Appraiser” means a person classified by the Board as a State
Certified General Real Estate Appraiser in accordance with A.R.S. § 32-3612(A)(1).
“Arizona or State Certified Residential Appraiser” means a person classified by the Board as a State
Certified Residential Real Estate Appraiser in accordance with A.R.S. § 32-3612(A)(2).
“Arizona or State Licensed Appraiser” means a person classified by the Board as a State Licensed Real
Estate Appraiser in accordance with A.R.S. § 32-3612(A)(3).
“Appraisal Foundation” means the educational organization, defined in A.R.S. § 32-3601(3), which is the
parent organization of the Appraiser Qualifications Board and the Appraisal Standards Board.
“Appraiser” means a person licensed or certified by the Board to complete real estate appraisals or
consulting assignments in accordance with A.R.S. § 32-3612(A)(1), (2), and (3).

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“Board” means the Arizona Board of Appraisal established by A.R.S. § 32-3604.
“Board counsel” means the assistant attorney general who provides legal advice to the Board.
“Board staff” means the executive director and the executive director’s designees.
“Complaint” means a written communication to the Board that meets the minimum criteria established in
R4-46-301(A)(1) and alleges violations of A.R.S. Title 32, Chapter 36 or this Chapter.
“Consent agreement” means a written agreement between the Board and a respondent that concerns
disciplinary or remedial action.
“Consulting assignment” means a real estate appraisal advisory engagement, the purpose of which is to
develop, without advocacy, an analysis, recommendation, or opinion where at least one opinion of
value is a component of the analysis leading to the assignment results.
“Conviction” means a judgment by any state or federal court of competent jurisdiction in a criminal case,
regardless of whether an appeal is pending or could be taken, and includes any judgment or order
based upon a plea of no contest.
“Course provider” means any organization or individual that offers qualifying or continuing education
courses.
“Direct supervision” means that a supervising appraiser of a trainee is directing and overseeing the
production of each appraisal assignment and is personally and physically present during the entire
inspection of each appraised property.
“Disciplinary action” means any regulatory sanction imposed by the Board, including a letter of due
diligence, a consent agreement, probation, suspension, revocation, or an acceptance of surrender of
a license or certificate.
“Dismissal” means termination of a complaint without further hearing.
“Distance education” means any educational process based on the geographical separation of learner
and instructor (for example, CD ROM, on-line learning, correspondence courses, video conferencing).
For qualifying education, distance education must provide interaction between learner and instructor
and include testing.
“Due diligence” means the diligence reasonably expected from, and ordinarily exercised by, a person
regulated by the Board, in accordance with A.R.S. Title 32, Chapter 36 and this Chapter.
“Formal complaint” means a notice of allegations issued by the Board under R4-46-302.
“Formal hearing” means an adjudication of a disputed matter, conducted by the Office of Administrative
Hearings (OAH) or the Board, under R4-46-302.
“Informal hearing” means a voluntary hearing before the Board in which a respondent is asked to respond
to a complaint under R4-46-301(D).
“Informational interview” means a voluntary appearance by a respondent at a public meeting before the
Board to discuss a complaint that has been filed against the respondent.
“Initial review” means the Board’s first review of a complaint, the response to the complaint, if any, the
relevant appraisal report or work product, and workfile.
“Investigation” means a fact-finding process initiated by a complaint concerning the practice of a named
respondent.
“Investigator” means an appraiser or property tax agent operating under a contract with the Board to carry
out independent investigations of alleged violations.
“Jurisdictional criteria” means the statutory standards used by the Board to determine whether a
complaint falls within the Board’s jurisdiction.
“Letter of concern” means a nondisciplinary advisory letter to notify a respondent that the action that is the
basis of a complaint does not warrant disciplinary action, but is nonetheless cause for concern on the
part of the Board and that its continuation may result in disciplinary action.

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“Letter of due diligence” means a disciplinary letter of agreement between the Board and a respondent
that may or may not include remedial action when minor violations of A.R.S. Title 32, Chapter 36 or
Articles 1, 2, or 3 of this Chapter have been found.
“Letter of remedial action” means a nondisciplinary letter issued by the Board that requires a respondent
to take remedial action when any minor violation of A.R.S. Title 32, Chapter 36 or Articles 1, 2, or 3 of
this Chapter has been found.
“Mentor” means a certified appraiser authorized by the Board to supervise the work product of an
appraiser subject to disciplinary action.
“Order” means an administrative order that contains findings of fact, conclusions of law, and disciplinary
action, issued by the Board after a formal hearing or by consent.
“Party” means each person or agency named or admitted as a party or properly seeking and entitled to
participate in any proceeding before the Board.
“Practicing appraiser” means a state licensed or certified appraiser who is actively engaged in performing
appraisal assignments.
“Probation” means a term of oversight by the Board, imposed upon a respondent as part of a disciplinary
action, which may include submission of logs, working under the supervision of a mentor, or other
conditions intended to protect the public and educate the respondent.
“Property tax agent” has the meaning in A.R.S. § 32-3651.
“Remedial action” means any corrective remedy ordered by the Board that is designed to assist the
respondent in improving the respondent’s professional practice.
“Respondent” means appraiser, course provider, or property tax agent against whom a complaint has
been filed, or any other party responding to a motion or a proceeding before the Board.
“Rules” means the requirements established under A.R.S. Title 32, Chapter 36, and found in the Arizona
Administrative Code, Title 4, Chapter 46.
“Summary suspension” means an immediate suspension of a license, certificate, or registration by the
Board based on a finding that the public health, safety, or welfare imperatively requires emergency
action.
“Supervising appraiser” means a state certified appraiser in good standing with a minimum of four years
of experience within the last four years as a practicing appraiser who engages in direct supervision of
a trainee pursuing a state license or certificate and provides training for work included within the
supervising appraiser’s classification.
“Trainee” means an individual who is being taught to become a state licensed or certified appraiser under
the direct supervision of a supervising appraiser.
“USPAP” means the Uniform Standards of Professional Appraisal Practice, issued and updated by The
Appraisal Foundation and incorporated by reference in the rules of the Board.
“Workfile” means the documentation necessary to support the analysis, opinions, and conclusions of an
appraisal, a consulting assignment, or a tax appeal.
R4-46-102. Powers of Board
The Board may appoint advisory committees as the Board deems appropriate. The committees shall
make advisory recommendations to the Board. The Board, in its discretion, may accept, reject, or modify
the advisory recommendations.
R4-46-103. Board Records; Public Access; Copying Fees
A. The Board shall keep all records reasonably necessary or appropriate to maintain an accurate
knowledge of its official activities including, but not limited to: applications for an initial license or
certificate; renewal applications; examination results; documents, transcripts, and pleadings
relating to disciplinary proceedings and to hearings on the denial of a license or certificate;

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investigative reports; staff memoranda; and general correspondence between any person and the
Board, members of the Board, or staff members.
B. A person shall not remove Board records from the office of the Board unless the records are in
the custody and control of a Board member, a member of the Board’s staff, or the Board’s
attorney. The Executive Director may designate a staff member to observe and monitor any
examination of Board records.
C. The Board shall provide copies of all records available for public inspection and copying
according to the procedures described in A.R.S. Title 39, Chapter 1, Article 2.
R4-46-106. Fees
A. The Board shall charge and collect fees for the following:
1. Initial Application: $400
2. Examination: $100
3. Biennial Renewal of a License or Certificate: $425
4. Delinquent Renewal (in addition to the Renewal fee): $25
5. Biennial National Registry: $80
6. Nonresident Temporary License or Certificate: $150
7. Course Approval:
a. Qualifying Education
i. Initial Course Approval: $400
ii. Renewal of Course Approval: $100
iii. Renewal of Course Approval to Change Instructor: $50
b. Continuing Education
i. Initial Course Approval: $200
ii. Renewal of Course Approval: $100
iii. Renewal of Course Approval to Change Instructor: $50
B. A person shall pay fees by cash, certified check, cashier’s check, or money order payable to the
Arizona Board of Appraisal.
C. A person making a public record request shall pay the Board the reasonable cost of reproduction
consistent with A.R.S. Title 39, Chapter 1, Article 2. The person shall pay for the Board’s cost of
reproduction by cash, certified check, cashier’s check, or money order.

Article 2 Licensing and Certification
R4-46-201. Appraiser Qualification Criteria
A. Except as provided in subsections (B), (C), and (D), an applicant for the applicable classification of
license or certificate shall meet that classification’s criteria established by the Appraiser Qualifications
Board (AQB) in either The Real Property Appraiser Qualification Criteria and Interpretations of the
Criteria (Real Property Appraiser Qualification Criteria adopted February 16, 1994, effective January
1, 1998; Includes all Interpretations and Supplementary Information as of January 1, 2002; Appendix I
Criteria Revisions effective January 1, 2003) referred to as the “1998 Criteria,” or The Real Property
Appraiser Qualification Criteria and Interpretations of the Criteria (Real Property Appraiser
Qualification Criteria Effective January 1, 2008; Appendix, Real Property Appraiser Qualification
Criteria Prior to January 1, 2008; Includes All Interpretations and Supplementary Information as of
February 1, 2007) referred to as the “2008 Criteria,” as follows:
1. The requirements are divided into three components: education, experience and examination.
An applicant shall meet the criteria in effect at the time the applicant completes a particular
component.
2. The Board shall give credit for completion of a component if the applicant meets either the
1998 Criteria or the 2008 Criteria for any component completed prior to January 1, 2008.
3. The Board shall give credit for completion of a component only if the applicant meets the 2008
Criteria for any component completed on or after January 1, 2008.
4. On and after November 1, 2008, an applicant shall meet the 2008 Criteria for all components,
regardless of when the component was completed. Both the 1998 Criteria and the 2008 Criteria
are incorporated by reference and are on file with the Board. These incorporated criteria include
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no future editions or amendments. A copy of the incorporated criteria may be obtained from the
Board or The Appraisal Foundation, 1155 15th Street, NW, Suite 1111, Washington, DC 20005;
(202) 347-7722; fax (202) 347-7727; or web site www.appraisalfoundtion.org.
B. Regardless of whether a transaction is federally related:
1. A State Licensed Residential Appraiser is limited to the scope of practice in A.R.S. § 323612(A)(3), and
2. A State Certified Residential Appraiser is limited to the scope of practice in A.R.S. § 323612(A)(2).
C. Notwithstanding the criteria incorporated by reference in subsection (A),
1. An applicant shall not obtain more than 75% of required qualifying education through distance
education;
2. An applicant shall not obtain the 15-hour National USPAP Course, or its equivalent, approved
through the AQB Course Approval Program, through distance education;
3. Qualifying education credit may be obtained at any time before the date of application, except
the 15-hour National USPAP Course or its AQB approved equivalent shall be obtained within two
years preceding the date of application; and
4. Seventy-five percent of the applicant’s quantitative experience requirements shall include work
product where the applicant inspected the subject property.
D. Notwithstanding the criteria incorporated by reference in subsection (A), there is no Trainee Real
Property Appraiser Classification.
1. A supervising appraiser shall instruct and directly supervise a trainee for any classification of
license or certificate in the entire preparation of each appraisal. A supervising appraiser shall
provide direct supervision, being personally and physically present during the entire inspection of
each appraised property with the trainee. The supervising appraiser shall approve and sign all
final appraisal documents, certifying the appraisals are in compliance with the Uniform Standards
of Professional Appraisal Practice.
2. A trainee may have more than one supervising appraiser, but a supervising appraiser shall not
supervise more than three trainees at any one time. A trainee shall maintain an appraisal log for
each supervising appraiser and, at a minimum, include the following in the log for each appraisal:
a. Type of property,
b. Date of report,
c. Property description,
d. Description of work performed by the trainee and scope of review and supervision by the
supervising appraiser,
e. Number of actual work hours by the trainee on the assignment, and
f. The signature and state certificate number of the supervising appraiser.
3. A supervising appraiser shall provide to the Board in writing the name and address of each
trainee within 10 days of engagement, and notify the Board in writing immediately upon
termination of the engagement. A state certified appraiser is not eligible to be a supervising
appraiser unless the appraiser’s certificate is in good standing and the appraiser has not been
subject to license or certificate suspension, probation, or mentorship within the last two years.
4. An appraiser who wishes to act as a supervising appraiser shall submit proof of completion of a
minimum of four hours of continuing education approved by the Board, regarding the role of a
supervising appraiser, before supervision begins. The required course shall not be taken through
distance education.
5. Each supervising appraiser shall submit to the Board proof of completion of a minimum of four
hours of continuing education approved by the Board regarding the role of a supervising
appraiser within 60 days of the effective date of this subsection. The required course shall not be
taken through distance education. If the supervising appraiser does not take the course within 60
days of the effective date of this subsection, the supervising appraiser shall not act as a
supervising appraiser until the class is taken and proof has been submitted to the Board.
6. In the event that an appraiser or a supervising appraiser does not comply with the applicable
requirements of subsection (D):
a. The appraiser or the supervising appraiser may be subject to disciplinary action pursuant
to A.R.S. § 32-3631(A)(8), and

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b. A trainee shall not receive experience credit for hours logged during the period that the
appraiser or supervising appraiser failed to comply with the applicable requirements of
subsection (D).
R4-46-202. Application for License or Certificate
A. An applicant for a state certificate or license shall submit a completed application accompanied by
the required application fee. Once the application has been filed, fees are nonrefundable, unless
A.R.S. § 41-1077 is applicable.
B. To be eligible for a license or certificate, an applicant shall:
1. Meet the qualification criteria contained in A.R.S. Title 32, Chapter 36, Article 2 and these
rules;
2. Achieve a passing score on the applicable examination required by R4-46-204(B), unless
exempted under A.R.S. § 32-3626;
3. Pay all required application and examination fees; and
4. Pay the biennial national registry fee.
C. In addition to the requirements listed in subsection (B), an applicant for licensure shall demonstrate
2,000 hours of experience earned in not less than 18 months.
D. An applicant shall meet all requirements for a license or certificate within one year of filing the
application or the applicant’s file will be closed and the applicant shall reapply, meeting the
requirements of R4-46-202(B). The Board shall notify an applicant whose application has been closed
by certified mail or personal service at the applicant’s last known address of record. Notice is
complete upon deposit in the U.S. mail or by service as permitted under the Arizona Rules of Civil
Procedure.
R4-46-203. Procedures for Processing Applications
A. To comply with A.R.S. Title 41, Chapter 6, Article 7.1, the Board establishes the following timeframes for processing license and certificate applications, including renewal applications:
1. The Board shall notify the applicant within 45 days of receipt of the application that it is either
administratively complete or incomplete. If the application is incomplete, the notice shall specify
what information is missing.
2. The Board shall not substantively review an application until the applicant has fully complied
with the requirements of R4-46-202(A). The Board shall render a final decision not later than 45
days after the applicant successfully completes all requirements of R4-46-202(A).
3. Although the applicant may have up to one year to comply with requirements of R4-46-202, the
overall time-frame for Board action is 90 days, 45 days for administrative completeness review
and 45 days for substantive review.
B. If the Board denies a license, the Board shall send the applicant written notice explaining:
1. The reason for denial, with citations to supporting statutes or rules;
2. The applicant’s right to seek a hearing to challenge the denial; and
3. The time periods for appealing the denial.
R4-46-204. Appraiser Examinations
A. An applicant may schedule an examination once the applicant has completed the experience and
education components specified in R4-46-201.
B. An applicant shall successfully complete the Appraiser Qualifications Board endorsed uniform
state appraiser examination or its equivalent for the applicable classification approved by the Board.
C. An applicant for a license or certificate who fails to pass an examination or fails to appear for a
scheduled examination may schedule another examination by filing a new examination application
and paying the examination fee.
R4-46-205. Issuance of a License or Certificate
An applicant who has met the appraiser qualification criteria prescribed in R4-46-202 shall be issued a
license or certificate which entitles the applicant to practice as an appraiser for the term of the license or
certificate.

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R4-46-206. Hearing on Denial of a License or Certificate
Any applicant denied a license or certificate by the Board may file a written request for hearing pursuant
to A.R.S. § 41-1092.03. Any hearing shall be conducted under the formal hearing procedures prescribed
in Article 3 of these rules; A.R.S. Title 41, Chapter 6, Article 10; and 2 A.A.C. 19.
R4-46-207. Renewal of a License or Certificate
A. An appraiser seeking to renew a license or certificate shall submit a completed application
accompanied by the required renewal application fees pursuant to A.R.S. § 32-3619 and R4-46-106.
Once the application has been filed, fees are nonrefundable, unless A.R.S. § 41-1077 is applicable.
To be eligible for renewal of a license or certificate, an applicant shall:
1. Meet the requirements of A.R.S. Title 32, Chapter 36, and these rules;
2. Meet the continuing education requirements in The Real Property Appraiser Qualification
Criteria and Interpretations of the Criteria, which is incorporated by reference in R4-46-201(A),
except:
a. The Board shall not grant credit toward the classroom hour requirement unless the length
of the educational offering is at least three hours,
b. A renewal applicant shall not obtain the seven-hour National USPAP Update Course, or its
equivalent, approved through the AQB course approval program, through distance education;
and
c. A renewal applicant shall not obtain more than 75% of required continuing education
through distance education; and
3. Pay the renewal and biennial national registry fees.
B. The same course cannot be repeated for use as continuing education within a renewal period, with
the exception of USPAP.
C. Appraisers may receive up to 50% of continuing education credit for course instruction of Board
approved course(s) per renewal period.
D. If the last day for filing falls on a Saturday, Sunday, or legal holiday, an appraiser may file the
renewal form on the next business day.
E. An appraiser who fails to seek renewal within the time periods specified in A.R.S. § 32-3619 shall
reapply and meet the requirements of R4-46-202.
R4-46-209. Replacement License or Certificate
If an original license or certificate has been lost, damaged, or destroyed, or if the name of a licensee or
certificate holder has been legally changed, the appraiser may obtain a replacement license or certificate
by filing the applicable form and paying the applicable fee to the Board.

Article 3 Hearings and Disciplinary Proceedings
R4-46-301. Complaints; Investigations; Informal Proceedings; Summary Suspensions; Refusal to
Appear
A. Complaints
1. The Board shall investigate a written complaint, including an anonymous complaint or a
complaint made on the Board’s own motion, alleging violations of A.R.S. Title 32, Chapter 36, or
this Chapter, if the complaint provides information that meets the minimum criteria. Minimum
criteria for a complaint include but are not limited to:
a. The name of the respondent against whom allegations are being made;
b. The action that is the basis of the complaint;
c. The time-frame in which the action occurred;
d. Each violation alleged to have been committed by the respondent; and
e. A copy of the report, if the complaint includes allegations concerning an appraisal,
consulting assignment, or property tax appeal.
2. Upon receipt of a complaint:
a. Board staff shall review the complaint and determine, in consultation with Board counsel if
necessary, whether the complaint meets jurisdictional criteria and if so, which edition of
USPAP is applicable.

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b. Within 14 days after receipt of a complaint the Board shall notify the respondent, as
prescribed in A.R.S. § 41-1092.04, of the complaint and the requirement that the respondent
file a written response within 30 days from the date on the notice. The Board shall provide a
copy of the complaint with the notice and request that the respondent address the issues in
the complaint. In the notice, the Board shall require that the respondent additionally provide
all of the following to the Board: the appraisal report, appraisal review, consulting assignment,
or property tax appeal at issue; and the workfile.
c. If the respondent requests more time to respond, the Board shall grant a single extension
of time that does not exceed 30 days.
B. Initial Review and Investigation
1. Within 75 days after receipt of a response or expiration of the time for response, the Board
shall conduct an initial review of the matter to determine whether further investigation is
necessary. If the Board determines further investigation is necessary, the Board may employ an
investigator or investigators and shall notify the respondent of the pending investigation.
2. If a respondent’s name is placed on a public meeting agenda, the Board shall mail a letter to
the respondent not less than seven days before the scheduled meeting, providing the respondent
with a copy of the posted notice of the public meeting.
3. If the respondent is present at the initial review, the Board may request that the respondent
participate in an informational interview. A respondent may refuse to participate in an
informational interview. The Board may use any information presented at the informational
interview in other proceedings related to the complaint.
4. At the initial review, the Board shall consider the complaint; any response; the appraisal report,
appraisal review, consulting assignment, or property tax appeal; and the workfile. The Board may
dismiss the matter, request or subpoena additional information, order a limited or full
investigation, or invite the respondent to an informal hearing, based on the information reviewed.
5. Board staff shall assign each investigator according to the investigator’s experience, expertise,
contract terms, and availability. Board staff shall select an investigator who does not have a
business or familial relationship with the respondent. Each investigative report shall contain the
signed certification specified in subsection (B)(6). An investigator’s draft report is considered work
product and is, therefore, confidential. The Board may ask for clarification or additional
information after review of a draft report. Upon acceptance by the Board, an investigative report is
considered final. The Board may adopt any or all of the findings in the final report at a public
meeting and may consider any additional, relevant information that is discovered before the
matter is resolved. The investigative report becomes nonconfidential upon resolution of the
complaint involved.
6. The following certification shall be included in every investigative report prepared for the Board
and signed by the investigator; I certify that, to the best of my knowledge and belief:
a. The statements of fact contained in this report are true and correct.
b. The reported analyses, opinions, and conclusions are limited only by the reported
assumptions and limiting conditions, and they are my personal, impartial and unbiased
professional analyses, opinions, conclusions, and recommendations.
c. I have no present or prospective interest in the property that is the subject of this
investigation, and I have no personal interest with respect to the parties involved in this
investigation.
d. I have no bias with respect to any property that is the subject of this investigation or to the
parties involved in this investigation.
e. My engagement for this investigation was not contingent upon developing or reporting any
predetermined result or outcome.
f. My compensation for this investigation is not contingent upon developing or reporting any
predetermined result or outcome, nor have I been instructed as to any predetermined result
or outcome by the Board, the Board staff, or other parties.
g. I have (or have not) made a personal inspection of the property that is the subject of this
investigation.
C. Settlement. Any time after a complaint has been filed against a respondent, the matter may be
resolved by a settlement in which the respondent agrees to accept disciplinary or remedial action by
consent. If the Board determines that the proposed settlement will adequately protect the public, the
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Board may enter into a consent agreement with the respondent. A statement made for the purpose of
settlement is not admissible in a formal hearing.
D. Informal Hearing; Disciplinary Action
1. If, based on the initial review or its review of the investigative report, the Board determines that
the respondent is or may be in violation of the Board’s statutes or rules, the Board may request a
voluntary informal hearing with the respondent. The Board shall provide the respondent with a
copy of any final investigative report in the matter, any supporting documentation, and notice of
the date, time, and location of the informal hearing, as prescribed in A.R.S. § 41-1092.04, at least
30 days before the informal hearing. The notice of informal hearing shall include all of the
following:
a. A statement of the matters asserted and issues involved;
b. Any request for additional information needed by the Board to prepare for the hearing;
c. An explanation of the respondent’s right to appear voluntarily with or without legal counsel;
and
d. An explanation of the respondent’s right to a formal hearing under R4-46-302.
2. The Board shall provide a copy of the informational material “Introduction to Informal Hearing,”
which explains the rights and responsibilities of the Board and respondent during the informal
hearing. (A copy is also available at the Board office).
3. The respondent may request and the Board may grant a continuance upon a showing of good
cause. During the informal hearing the Board shall swear witnesses, question the respondent and
witnesses, and deliberate. The respondent may respond to the Board’s questions, present
witnesses, and ask questions of the Board and all witnesses regarding the matter before it.
4. If the Board finds a violation of the statutes or rules, but the violation is not of sufficient
seriousness to merit suspension or revocation, it may take one or more of the following actions:
a. Issue a letter of concern;
b. Issue a letter of remedial action;
c. Offer a letter of due diligence, which may or may not include remedial action;
d. Offer a consent agreement including an order of discipline that sets a time period and
terms of probation sufficient to protect the public welfare and safety and educate the
respondent. The Board may require one or more of the following as terms of probation:
i. Training or education;
ii. Supervision or mentor review;
iii. Restriction on the nature and scope of the respondent’s practice; or
iv. Other reasonable measures designed to protect the public and educate the
respondent.
5. For any Board action other than a letter of concern or a letter of remedial action, the Board
shall request that the respondent sign a consent agreement, which may include findings of fact
and conclusions of law, depending on the severity of the violation, but shall identify and explain
each violation found. If the respondent is aggrieved by the Board’s decision to issue a letter of
concern or letter of remedial action, the respondent may request a formal hearing in writing,
within 30 days from the date the written notice of the outcome of the informal hearing is received.
6. In resolving a complaint, the Board shall consider mitigating and aggravating circumstances,
including but not limited to:
a. Whether a violation is intentional;
b. Whether the respondent has a prior disciplinary history;
c. The time that has elapsed since the violation, and any prior violation;
d. Whether any prior violation is similar to the present violation;
e. The complexity of the assignment;
f. Whether the assignment was outside the respondent’s competence; and
g. Whether the respondent has taken courses after a violation to prevent future violations.
E. Summary Suspension. If the Board finds that the public health, safety, or welfare imperatively
requires emergency action, and incorporates a finding to that effect in its order, the Board may order
a summary suspension pending proceedings for revocation or other action. If an order of summary
suspension is issued, the Board shall serve the respondent with a written notice of summary
suspension and formal hearing, listing the charges against the respondent and setting the date for the

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formal hearing as soon as is reasonably possible, but in no event more than 60 days from service of
the written notice.
F. Refusal to Appear. A respondent may refuse a request to appear at an informal hearing. If the
respondent refuses to appear or does not appear, the Board may schedule the matter for a formal
hearing.
G. 12-Month Review. If a matter is not resolved within 12 months from receipt of the response, the
Board shall schedule the matter for review at each regularly scheduled Board meeting to determine
whether good cause exists to continue the investigation. If, after completing its investigation, the
Board finds that further action against the respondent is not warranted, the Board shall dismiss the
matter.
R4-46-302. Formal Hearing Procedures
A. The Board shall issue a notice of hearing and formal complaint for formal disciplinary proceedings
if:
1. After an informal hearing, the Board determines that suspension or revocation may be
warranted;
2. After an informal hearing, the respondent refuses to sign a letter of due diligence or consent
agreement offered by the Board;
3. The respondent is aggrieved by the Board’s decision in an informal hearing; or
4. After completing its investigation, the Board finds that suspension or revocation may be
warranted.
B. Except as provided in R4-46-301(E), the Board shall provide notice of a formal hearing to a
respondent at least 30 days before the date set for the hearing. The Board shall notify the respondent
by certified mail or personal service at the respondent’s last known address of record. Unless
otherwise specified, any notice provided for in these rules is complete upon deposit in the U.S. mail or
by service as permitted under A.R.S. § 41-1092.04.
C. On its own motion or the motion of a party, the Board may hear a case or have the case heard by
an administrative law judge. The Board may accept, reject, or modify the administrative law judge’s
recommended decision as prescribed by A.R.S. § 41-1092.08, and shall issue a final order.
D. Board Hearings
1. The Board may conduct a hearing without adherence to the rules of evidence used in civil
proceedings. The Board shall include the respondent’s application and disciplinary records as
evidence in the hearing record.
2. In all hearings required or permitted by statute, order of the Board, or these rules, the party
seeking relief has the burden of proof and will present evidence first.
3. The Board shall conduct each formal hearing according to A.R.S. Title 41, Chapter 6, Article
10.
E. If a party fails to appear for a formal hearing without good cause, the Board shall act upon the
evidence without further notice.
F. The Board shall make and keep a record of the hearing and, in the case of disciplinary hearings or
if requested by a party or ordered by the Board, a transcript shall be prepared and filed with the
Board. If the transcript is prepared at the request of a party, the party making the request shall pay for
the cost of the transcript, unless the Board, for good cause shown waives assessment of this cost.
G. A party may request and the Board may grant a continuance of a hearing date or any other
deadline imposed by R4-46-302 upon a showing of good cause.
R4-46-303. Rehearing or Review of the Board’s Decisions
A. Any party in a contested case or appealable agency action before the Board may file a motion for
rehearing or review within 30 days after service of the final administrative decision. Service is
complete upon personal service or five days after the date the decision is mailed by certified mail to
the party’s last known address of record. The party shall attach a full supporting memorandum
specifying the grounds for the motion.
B. The opposing party may file a response within 15 days after service of the motion for rehearing or
review, or by a date ordered by the Board, whichever is later. The party shall support the response
with a memorandum discussing legal and factual issues.
C. Either party may request or the Board may order oral argument.
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D. The Board may grant rehearing or review for any of the following causes materially affecting a
party’s rights:
1. Irregularity in the administrative proceedings of the Board or any other abuse of discretion
which deprived the moving party of a fair hearing;
2. Misconduct of the Board or any party;
3. Accident or surprise which could not have been prevented by ordinary prudence;
4. Newly discovered material evidence which could not with reasonable diligence have been
discovered and produced at the original hearing;
5. Excessive or insufficient sanction;
6. Error in the admission or rejection of evidence or other errors of law at the administrative
hearing or during the progress of the proceedings or;
7. Unjustified decision based upon the evidence, or a decision that is contrary to law.
E. The Board may affirm or modify the decision or grant a rehearing to any party on all or part of the
issues for any of the reasons set forth in subsection (D). An order modifying a decision or granting a
rehearing shall specify with particularity the grounds for the order. The rehearing, if granted, shall be
limited to matters specified by the Board.
F. Not later than 30 days after a decision is rendered, the Board may order a rehearing or review on
its own initiative, for any reason which it might have granted relief on motion of a party.
G. When a motion for rehearing or review is based upon affidavits, they shall be served with the
motion. An opposing party may submit opposing affidavits with the response. Reply affidavits may be
permitted.
R4-46-304. Conviction and Judgment Disclosure
A. When an appraiser or property tax agent is convicted of any act which is or would be punishable
as a felony, crime involving moral turpitude, or any crime which is substantially related to the
respective qualifications, functions, and duties of an appraiser or property tax agent, the convicted
person shall notify the Board within 20 days of entry of a plea of guilty or conviction.
B. When a civil judgment based on fraud, misrepresentation, or deceit in the making of any appraisal
is entered against an appraiser or property tax agent, the person against whom the judgment entered
shall notify the board within 20 days of entry of judgment.
R4-46-305. Terms and Conditions of Reapplication After Revocation
A. An applicant who reapplies after revocation of a license, certificate, or course approval, shall
submit an application for license, certificate, or course approval consistent with these rules. The
applicant shall attach substantial evidence to the application that the issuance of a license, certificate,
or course approval will no longer constitute a threat to the public welfare and safety.
B. The Board shall make a determination of each application that is consistent with the public safety
and welfare.
R4-46-306. Complaint Information Availability
A. Every six months, the Board shall generate a report for publication on the Board’s web site or in a
newsletter that indicates for that period the number of:
1. Complaints received,
2. Complaints dismissed,
3. Complaints referred for investigation, and
4. Complaints referred for informal or formal hearing.
B. In preparing the report, the Board shall include the severity level of violations with reference to the
Board Complaint Resolution Chart (a copy is available at the Board office); the actual complaint
resolution implemented by the Board; and any other information that the Board deems useful to
appraisers, property tax agents, and the public.

Article 4 Standards of Practice
R4-46-401. Standards of Appraisal Practice
Every appraiser, in performing the acts and services of an appraiser, shall comply with the Uniform
Standards of Professional Appraisal Practice (USPAP), 2012-2013 edition, published by The Appraisal
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Foundation, which is incorporated by reference and on file with the Board. This incorporation by reference
contains no future editions or amendments. A copy of the USPAP 2012-2013 edition may be obtained
from The Appraisal Foundation, 1155 15th St., NW, Suite 1111, Washington, DC 20005; (202) 347-7722;
fax (202) 347-7727; or web site www.appraisalfoundation.org.

Article 5 Course Approval
R4-46-501. Course Approval
A. A course shall be approved under these rules as either qualifying or continuing education. In order
to be approved as qualifying or continuing education, the course must be found to satisfy all the
respective criteria set forth in the real property appraiser qualification criteria and interpretations of the
criteria in R4-46-201(A), except:
1. The 15-hour National USPAP Course or its equivalent approved through the AQB Course
Approval Program shall not be in the form of distance education;
2. Only continuing education courses of at least three hours shall be considered for approval.
B. Each approved course shall be assigned an index number and shall be assigned a maximum
number of hours of instruction (including examination time if applicable).
C. Upon receipt of course approval, the course provider may represent in any materials that the
course is a Board approved course. If the number of hours approved by the Board are less than the
number of scheduled hours, the number of approved hours must be clearly indicated.
D. Any school, organization, person or other entity that owns the proprietary rights to a course is
eligible to apply for course approval as a course provider. All applications for course approval shall be
submitted by a course provider. For the purposes of these rules, the following are considered to be a
course provider:
1. An entity that owns a course and that conducts the course directly or through affiliated entities.
2. An affiliated entity of a course provider having Board approval where such affiliated entity
conducts the same course.
3. An entity that has purchased or otherwise lawfully acquired from the course provider of a Board
approved course, the course materials for such course and that has the right to independently
conduct a course using such acquired course materials.
E. Course approval granted to a course provider shall apply to any affiliated entity subject to the
following conditions:
1. The course provider required the affiliated entity to conduct the course:
a. Utilizing the course provider’s course materials (including textbook and examinations, if
any);
b. Allowing the same number of approved hours as the course provider;
c. The instructor is approved by the Board;
d. In accordance with the course provider’s policies relating to student attendance, course
scheduling and course prerequisites (if applicable).
2. The course provider assumes full responsibility in the event the affiliated entity violates any
provisions of these rules.
F. Course approval commences on the date initial approval is granted by the Board. Course approval
by the Board shall not be granted for courses which have been offered by the course provider prior to
the Board’s review of the course approval application.
G. A course provider seeking course approval shall apply to the Board on the applicable form and pay
the appropriate fee. Once the application has been filed, fees are nonrefundable. An application must
be complete before it will be placed on an agenda for approval.
H. A course provider shall not misrepresent Board approval status in advertising.
I. The course provider shall submit with the application an outline and other written materials. In order
to be approved, the course must be found to satisfy the following requirements:
1. Course description: the course materials must include a course description which clearly
describes the content of the course.
2. Summary outline: the course materials shall include a summary outline of major topics and the
number of classroom hours devoted to each.
3. Learning objectives: the course materials shall include specific learning objectives which:

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a. Clearly state the specific knowledge and/or skills students are expected to acquire by
completing the course;
b. Are consistent with the course description;
c. Are consistent with the instructional materials;
d. Are reasonably achievable within the number of classroom hours allotted for the course;
e. For qualifying education courses, shall clearly identify the required core curriculum, the
module subtopic, and the number of course hours; and
f. For continuing education courses, shall clearly identify the appraisal topic and the number
of course hours.
4. Instructional materials: instructional materials to be used by students in the course shall:
a. Cover the subject matter in sufficient depth to achieve the stated course learning
objectives;
b. Provide appropriately balanced coverage of the subject matter in view of the stated course
learning objectives;
c. Reflect current knowledge and practice;
d. Contain no significant errors;
e. Reflect correct grammatical usage and spelling;
f. Effectively communicate and explain the information presented;
g. Be suitable in layout and format; and
h. Be suitably bound/packaged and be produced in a quality manner.
5. Examinations for qualifying education: course examinations shall consist either of a series of
examinations or a comprehensive final examination or both. The course examination(s) shall
comply with the following requirements:
a. Contain a sufficient number of questions to adequately test the subject matter covered in
the course;
b. The amount of time devoted to the examination(s) is appropriate for the course;
c. The examination questions, individually and collectively, test at a difficulty level appropriate
to measure student achievement of the stated course learning objectives;
d. The subject matter tested by examination questions is adequately addressed in the course
instructional materials;
e. The examination questions are written in a clear and unambiguous manner; and
f. The examination questions are accurate and the intended correct answer is clearly the best
answer choice.
6. Prerequisites: the course provider must have established appropriate prerequisites for any
course other than an introductory course on basic real estate appraisal principles and practices or
a course on appraisal standards and ethics.
7. Instructor qualifications: an instructor must be approved by the Board to teach a specific Boardapproved course. An instructor must meet one or more of the following qualifications:
a. A baccalaureate degree in any field and three years of experience directly related to the
subject matter to be taught; or
b. A masters degree in any field and two years of experience directly related to the subject
matter to be taught; or
c. A baccalaureate degree in a field that is directly related to the subject matter to be taught
and one year of experience directly related to the subject matter to be taught; or
d. An associate degree in a field that is directly related to the subject matter to be taught and
three years of experience directly related to the subject matter to be taught; or
e. A masters or higher degree in a field that is directly related to the subject matter to be
taught; or
f. Five years of real estate appraisal teaching experience directly related to the subject matter
to be taught; or
g. Seven years of real estate appraisal experience directly related to the subject matter to be
taught.
h. The national USPAP courses must be taught by an AQB certified USPAP instructor and
equivalent USPAP courses must be taught by an instructor approved by the AQB.

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8. Current classroom offering: conduct the course in a setting physically suitable to the
educational activity of the course. Courses presented by distance education must comply with the
criteria adopted in these rules;
9. Attendance policy: the course provider must have a written attendance policy that requires
student attendance to be verified. Policy must:
a. Stipulate that the student must be present for the entire course;
b. Include on the attendance records form the name of the instructor(s);
c. Provide that nonmembers of the course provider’s association or organization may apply
for the course without membership in the association or organization;
d. Provide for retention of attendance records for a minimum of five years.
10. Course scheduling policy: the course provider shall have an established policy on course
scheduling that provides a maximum of nine classroom hours of instruction in any given day and
appropriate breaks during each class session.
11. Course completion certificate policy: the course provider shall have an established policy
assuring prompt issuance of signed course completion certificates to attendees which shall
include all information required on the form of certification provided by the Board.
12. Audit policy: the course provider shall permit the executive director or the executive director’s
representative to audit the course at no cost to the Board in order to evaluate the instruction. The
course provider shall permit the executive director or the executive director’s representative to
review records appropriate to selected course offerings.
13. Instructor change: if a course provider wishes to use an instructor other than the instructor
approved by the Board as part of the initial course approval, the course provider must apply to the
Board for approval of any new or substitute instructor and pay the applicable fee. Any new or
substitute instructor must meet the instructor qualifications set out in this Section.
J. Course approval is valid for a period of one year, expiring at the end of the month in which approval
was granted if there have been no substantive changes to the materials to be addressed in the
course, including but not limited to changes in the course outline, text, or other written material. No
later than 30 days prior to the expiration date, a course provider may apply for renewal of the course
approval and pay the appropriate fee. If there have been substantive changes in the materials to be
addressed in the course, including but not limited to changes in the course outline, text, or other
written material, the course shall be considered as a new course and the course provider shall file an
application for course approval meeting all the requirements of this Section and pay the appropriate
fee.
K. A course approved for credit hours at a community college, college or university in this state need
not be approved by the Board if the course is substantially the same as required by the criteria. The
applicant for licensure, certification or renewal shall submit documentation prepared by the course
provider identifying the required core curriculum, the module subtopic and the number of course
hours for qualifying education or the appraisal topic and the number of course hours for continuing
education.
L. If a course is offered outside of Arizona, the course has been approved by the
licensure/certification board in the state in which the course is offered, and the course is substantially
the same as required by the criteria, the Board will accept the course. However, the course shall not
be in the form of distance education taught before May 3, 2005. The applicant for licensure,
certification or renewal must submit documentation to show approval.
M. The Board shall investigate and may deny, revoke, or suspend course approval for any of the
following acts or omissions:
1. Failure to comply with or meet any requirements set forth in this Section.
2. Failure to use an instructor approved by the Board as part of the course approval application or
otherwise.
3. Failure to instruct in a manner consistent with the outline and materials previously approved by
the Board.
N. If the Board finds that the public welfare or safety requires emergency action and incorporates a
finding to that effect in its order, the Board shall order a summary suspension of course approval
pending proceedings for revocation or other action. If an order of summary suspension is issued, the
Board shall serve the course provider with a written notice of summary suspension and formal
hearing, listing the charges against the course provider and setting a formal hearing within 30 days.
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R4-46-503. Hearing on Denial of Course Approval
Any applicant or course provider denied course approval or any course provider whose course approval
is revoked or suspended may file a written request for a hearing within 30 days after service of the notice
of denial. The Board shall process all hearings and disciplinary matters involving course approval in a
manner consistent with the formal hearing procedures prescribed in Article 3.

Article 6 Property Tax Agents
R4-46-601. Standards of Practice
The Board may revoke or suspend an agent’s registration or otherwise discipline a property tax agent to
the extent permitted by A.R.S. § 32-3654 for any of the following acts or omissions:
1. Engaging in an activity that leads to a conviction for a crime involving the tax profession;
2. Operating beyond the boundaries of an agreed relationship with an employer or a client;
3. Inferring or implying representation of a person or firm that the agent does not represent, or
filing a document on behalf of a taxpayer without specific authorization of the taxpayer;
4. Violating the confidential nature of the property tax agent-client relationship, except as required
by law;
5. Inappropriately offering or accepting anything of value with the intent of inducing or in return for
a specific action;
6. Assigning, accepting, or performing a tax assignment that is contingent upon producing a
predetermined analysis or conclusion;
7. Issuing an appraisal analysis or opinion, in the performance of a tax assignment, that fails to
disclose bias or the accommodation of a personal interest;
8. Willfully furnishing inaccurate, deceitful, or misleading information, or willfully concealing
material information in the performance of a tax assignment;
9. Preparing or using, in any manner, a resume or statement of professional qualifications that is
misleading or false;
10. Promoting a tax agent practice and soliciting assignments by using misleading or false
advertising;
11. Soliciting a tax assignment by assuring a specific result or by stating a conclusion regarding
that assignment without prior analysis of the facts;
12. Performing an appraisal as defined by A.R.S. § 32-3601 unless licensed or certified by the
Board as an appraiser.
R4-46-602. Disciplinary Proceedings; Board Action; Notice Requirements
The Board shall process all hearings and disciplinary matters involving property tax agents in a manner
consistent with the formal hearing procedures prescribed by Article 3 and consistent with A.R.S. § 323654.

Article 7 General Provisions- Fees
R4-46-704. Fee
The fee to apply for initial registration is $2,500 regardless of the number of appraisers on the appraiser
panel. Upon expiration of the initial registration the fee to apply for a two year renewal registration is
$2,500 regardless of the number of appraisers on the appraiser panel.

Title 33, Chapter 7 LIENS
Article 10 Commercial Real Estate Broker Liens
33-1071. Commercial real estate broker lien; definition
A. Except as prescribed by subsection C, an employing real estate broker pursuant to title 32, chapter 20
has a lien against real property for the amount of compensation that is agreed to be paid to the broker by

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the owner of the real property for the broker's services in the lease or rental of the real property. The lien
is created only if all of the following apply:
1. There is a written agreement between the broker and the owner of the real property that
provides for the payment of a commission or other compensation to that broker for the broker's
services in a real estate transaction and that agreement discloses in the same size type as the
majority of the remainder of the agreement above the portion of the agreement calling for the
signature of the owner of the real property that the failure to pay the agreed upon commission or
compensation may give rise to lien rights as provided by this article.
2. The broker produces a person or entity that is ready, willing and able to lease or rent the real
property on the terms provided in the written agreement between the broker and the owner of the
real property or on terms that are otherwise acceptable to the owner as evidenced by a written
instrument that is signed by the owner.
3. The broker fully complies with sections 33-1072 and 33-1073.
4. All of the conditions for the payment of the commission or other compensation described in the
written agreement have been satisfied.
B. Mechanics' and materialmen's lien rights established pursuant to title 33, chapter 7, article 6 have
priority over the lien rights created by this article.
C. Consensual liens, mortgages and deeds of trust that are recorded before the recordation of the
broker's preliminary notice of intent to lien have priority over the lien rights created by this article and over
the notice of commercial real estate broker lien recorded pursuant to this article.
D. Real property is not subject to a commercial real estate broker lien pursuant to this article if either of
the following apply:
1. The real property is conveyed to a bona fide purchaser for value before the recordation of a
broker's preliminary notice of intent to lien.
2. It is encumbered by a bona fide lender for value before the recordation of a broker's
preliminary notice of intent to lien.
E. Except as provided in subsection D of this section, the lien rights provided by this article apply to all
commercial real property and do not apply to any transaction involving either of the following:
1. Residential real property with fewer than five residential units.
2. Real property on which single family mobile home lots, manufactured housing lots, residences
or condominiums are sold unit by unit.
F. For purposes of this article, "real property" or "subject real property" means the real property interest
that is owned by the person who is the party to the agreement with the broker as prescribed by this
section.
33-1072. Lien attachment; notice of commercial real estate broker lien; notice to owner
A. A lien pursuant to this article attaches to the subject real property when all of the following occur:
1. The broker produces a person or entity that is ready, willing and able to lease or rent the real
property on the terms provided in the written agreement between the broker and the owner of the
real property or on terms that are otherwise acceptable to the owner as evidenced by a written
instrument that is signed by the owner.
2. The broker fully complies with subsection B of this section.
3. The broker records a document entitled "notice of commercial real estate broker lien" in the
office of the county recorder in the county or counties in which the subject real property is located.
The notice of commercial real estate broker lien shall be recorded as follows:
(a) Except as provided in subdivision (b), if the notice of commercial real estate broker
lien is based on a lease or rental of the real property, the notice of commercial real estate
broker lien shall be recorded within ninety days after the tenant takes possession of the
leased premises.
(b) If the notice of commercial real estate broker lien is based on compensation that is to
be paid in installments and any of those installments are due after the lease or rental of
the real property, the notice of commercial real estate broker lien shall be recorded within
ninety days after the tenant takes possession of the real property and is valid only to the
extent that monies remain unpaid by the owner of the real property to the broker.
B. On recording the notice of commercial real estate broker lien, the broker's lien is perfected.

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C. Not later than fifteen days before the date that the tenant takes possession of the leased premises, the
broker shall record a document entitled "broker's preliminary notice of intent to lien" in the office of the
county recorder in the county in which the real property is located and shall deliver personally or by first
class mail a copy of the broker's preliminary notice of intent to lien to the owner of the real property
interest. The broker's preliminary notice of intent to lien shall state that the broker is entitled to
compensation under the terms set forth in the written agreement between the broker and the owner and
that the broker intends to claim a lien on the real property. The broker's preliminary notice of intent to lien
shall include all of the information prescribed by section 33-1073, subsection A and shall be entitled
"broker's preliminary notice of intent to lien". The broker's failure to record the broker's preliminary notice
of intent to lien within the time prescribed by this subsection extinguishes the broker's lien rights.
33-1073. Contents of notice of lien; verification
A. The notice of commercial real estate broker lien shall include all of the following:
1. The name and the address of the principal place of business of the broker who claims the lien
and the broker's real estate license number.
2. The name and the mailing address of the owner of the real property.
3. The real property interest that is owned by the owner.
4. The amount of the lien.
5. The legal description of the real property that is the subject of the lien.
6. The street address of the real property, if any.
7. The statement that the broker who claims the lien is entitled to compensation from the owner of
the real property.
8. The notarized signature of the real estate broker that avows that based on information and
belief the contents of the notice of commercial real estate broker lien are true and accurate.
B. The words "unknown" or "not available" and similar terms may not be used in lieu of the information
prescribed by subsection A, and any use of those terms in the notice of commercial real estate broker lien
or broker's preliminary notice of intent to lien invalidates the commercial real estate broker lien.
33-1074. Foreclosure; limitation of action; attorney fees
A. A commercial real estate broker lien recorded pursuant to this article is enforceable by foreclosure
action in superior court as if the lien were a mortgage.
B. A lien pursuant to this article is only valid for two years after the date that it is recorded unless an
action is brought within that two years to enforce the lien and a notice of pendency of the action is
recorded pursuant to section 12-1191 in the office of the county recorder in the county in which the
property is located within five days after filing the action.
C. In any action to foreclose a commercial real estate broker lien, the prevailing party shall be awarded
costs and reasonable attorney fees.
33-1075. Satisfaction of lien; damages
A. On satisfaction of any lien established pursuant to this article, the lienholder shall record a satisfaction
of the lien within thirty days. The satisfaction shall be in the form prescribed by section 11-480. A
lienholder who fails to record a satisfaction of lien pursuant to this section is subject to the penalties
prescribed by section 33-712.
B. A broker shall record a waiver and release of claim of lien that extinguishes the broker's lien rights on
either of the following:
1. Within thirty days after satisfaction of a broker's claim of lien arising pursuant to this article if
satisfaction occurs before recording a notice of commercial real estate broker lien.
2. Within ten days after receipt of a written request from the owner and if the broker fails to record
a notice of commercial real estate broker lien within the time period prescribed by section 331072, subsection A, paragraph 3, subdivision (a) or (b).
C. A broker who is required to record a waiver and release of claim of lien by subsection B of this section
and who fails to record a waiver is subject to the penalties prescribed by section 33-712.
D. A waiver and release of claim of lien is sufficient if it complies with other applicable laws and if it is in
substantially the following form:
Waiver and Release of Claim of Lien

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I (we) hereby unconditionally waive and release any claim of lien evidenced by the recording of a
"broker's preliminary notice of intent to lien" or "notice of commercial real estate broker lien", or
both, recorded on
(date)
in docket or book __________ at page _______, or instrument
number _______, records of ____________ county, Arizona.
Dated:
Signature
(Acknowledgment)
33-1076. Discharge of commercial real estate broker's liens; bond; limitations of actions;
discharge of surety; judgment
A. After perfection of a lien pursuant to this article, an owner, including any person who has a legal or
equitable interest in the land that is subject to the lien, a mortgagee or any other lien creditor may, either
before or after the commencement of an action to foreclose the lien, cause to be recorded in the office of
the county recorder in the county in which the land is located a surety bond in the form described in
subsection B of this section, together with a power of attorney disclosing the authority of the person
executing the bond on behalf of the surety. On the recordation of the bond, the property shall be
discharged of the lien whether or not a copy of the bond is served on the claimant or the claimant perfects
the claimant's rights against the bond.
B. A surety bond to discharge a lien perfected under this article shall be executed by the person seeking
to discharge the lien, as principal, and by a surety company or companies holding a certificate of authority
to transact surety business in this state that is issued by the director of the department of insurance
pursuant to title 20, chapter 2, article 1. The bond is for the sole protection of the claimant who perfected
the lien. Notwithstanding any other statute, the surety bond shall not be executed by individual surety or
sureties, even if the requirements of section 7-101 are satisfied. The bond shall be in an amount equal to
one and one-half times the claim secured by the lien and shall be conditioned for the payment of the
judgment that would have been rendered against the property for the enforcement of the lien. The legal
description of the property and the docket and page of the lien sought to be discharged shall be set forth
in the bond.
C. On recordation of the bond with the county recorder, the principal on the bond shall cause a copy of
the bond to be served within a reasonable time on the lien claimant, and if a suit is then pending to
foreclose the lien, the claimant, within ninety days after receipt of the bond, shall cause proceedings to be
instituted to add the surety and the principal as parties to the lien foreclosure suit.
D. The bond shall be discharged and the principal and sureties shall be released on any of the following:
1. The failure of the lien claimant to commence a suit within the time allowed pursuant to section
33-1074.
2. Failure of the lien claimant to name the principal and sureties as parties to the action seeking
foreclosure of the lien if a copy of the bond has been served on the claimant. If the bond is served
on the claimant fewer than ninety days after the date the claimant would be required to
commence an action pursuant to section 33-1074, the claimant has ninety days from the date of
receiving a copy of the bond to add the principal and the sureties as parties to the lien foreclosure
suit.
3. The dismissal of the foreclosure suit with prejudice as to the claimant or the entry of judgment
in a suit against the claimant.
E. In an action to foreclose a lien under this article, if a bond has been filed and served as prescribed by
this section a judgment for the claimant on the bond shall be against the principal and the principal's
sureties and shall not be against the property.
F. If a copy of the bond is not served on the claimant as provided in subsection C of this section, the
claimant has six months after the discovery of the bond to commence an action on the bond, except that
no action may be commenced on the bond after two years from the date it was recorded as provided in
this section.
G. The county recorder of the county in which the bond and contract are recorded shall index the bond
and contract under the index classification in which commercial real estate broker liens are recorded.

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Title 33, Chapter 8 HOMESTEAD AND PERSONAL PROPERTY
EXEMPTION
Article 1 Homesteads and Homestead Exemption
33-1101. Homestead exemptions; persons entitled to hold homesteads
A. Any person the age of eighteen or over, married or single, who resides within the state may hold as a
homestead exempt from attachment, execution and forced sale, not exceeding one hundred fifty
thousand dollars in value, any one of the following:
1. The person's interest in real property in one compact body upon which exists a dwelling house
in which the person resides.
2. The person's interest in one condominium or cooperative in which the person resides.
3. A mobile home in which the person resides.
4. A mobile home in which the person resides plus the land upon which that mobile home is
located.
B. Only one homestead exemption may be held by a married couple or a single person under this section.
The value as specified in this section refers to the equity of a single person or married couple. If a married
couple lived together in a dwelling house, a condominium or cooperative, a mobile home or a mobile
home plus land on which the mobile home is located and are then divorced, the total exemption allowed
for that residence to either or both persons shall not exceed one hundred fifty thousand dollars in value.
C. The homestead exemption, not exceeding the value provided for in subsection A, automatically
attaches to the person's interest in identifiable cash proceeds from the voluntary or involuntary sale of the
property. The homestead exemption in identifiable cash proceeds continues for eighteen months after the
date of the sale of the property or until the person establishes a new homestead with the proceeds,
whichever period is shorter. Only one homestead exemption at a time may be held by a person under this
section.
33-1102. Exemption by operation of law; designation of multiple properties on creditor’s request;
recording
A. A person who is entitled to a homestead exemption as prescribed by section 33-1101 holds that
exemption by operation of law and no written claim or recording is required. If a person has more than
one property interest to which a homestead exemption may reasonably apply, a creditor may require the
person to designate which property, if any, is protected by the homestead exemption. The creditor shall
demand the designation by sending a letter by certified mail, return receipt requested, to each address of
the person which may reasonably be protected by the homestead exemption. The person shall designate
the property by recording a homestead exemption in the office of the county recorder where the property
is located or by sending the creditor a certified letter, return receipt requested, within thirty days of
receiving the creditor's demand letter. If the person receives the creditor's letter and fails to respond as
provided by this subsection, the person may only assert the homestead exemption by recording a claim in
the office of the county recorder where the property is located.
B. If the person is married, the homestead may be selected from the community property, the joint
property or the separate property of the person.
33-1103. Effective date of homestead exemption; extent of exemption; exceptions
A. The homestead provided for in section 33-1101, subsection A is exempt from process and from sale
under a judgment or lien, except:
1. A consensual lien, including a mortgage or deed of trust, or contract of conveyance.
2. A lien for labor or materials claimed pursuant to section 33-981.
3. A lien for child support arrearages or spousal maintenance arrearages. An award of court
ordered support is not a lien for the purposes of this paragraph unless one of the following
applies:
(a) An arrearage has been reduced to judgment.
(b) A lien exists pursuant to section 25-516.
(c) The court orders a specific security interest of the property for support.
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4. To the extent that a judgment or other lien may be satisfied from the equity of the debtor
exceeding the homestead exemption under section 33-1101.
B. A sale as described in subsection A of this section and not excepted by subsection A, paragraph 1, 2,
3 or 4 of this section is invalid and does not convey an interest in the homestead, whether made under a
judgment existing before or after the homestead is established.
C. In a contempt proceeding brought to enforce payment of any form of child support or spousal
maintenance, the court may consider the portion of property claimed as exempt pursuant to section 331101, subsection A, as a resource from which an obligor has the ability to pay.
33-1104. Abandonment of homestead; encumbrance of homestead
A. A homestead may be abandoned by any of the following:
1. A declaration of abandonment or waiver.
2. A transfer of the homestead property by deed of conveyance or contract for conveyance.
3. A permanent removal of the claimant from the residence or the state. A claimant may remove
from the homestead for up to two years without an abandonment or a waiver of the exemption.
B. A declaration of abandonment or waiver shall be executed by the claimant and acknowledged. A
declaration of abandonment or waiver is effective only from the time of its recording in the office of the
county recorder in the county in which the homestead property is located.
C. This article shall not be construed to repeal the provisions of section 25-214, subsection C, pertaining
to the acquisition, conveyance or encumbrance of community property.
D. Any recorded consensual lien, including a mortgage or deed of trust, encumbering homestead property
shall not be subject to or affected by the homestead claim or exemption.
E. Notwithstanding the provisions of subsection A, paragraph 2 of this section, a transfer of the
homestead property by deed of conveyance or contract for conveyance under a trust, as defined in
section 14-1201, in which the claimant retains the power to administer and revoke the trust shall not
constitute an abandonment of the homestead.
33-1105. Sale by judgement creditor of property subject to homestead exemption
A judgment creditor other than a mortgagee or beneficiary under a trust deed may elect to sell by judicial
sale as specified in title 12 the property in which the judgment debtor has a homestead under section 331101, subsection A, provided that the judgment debtor's interest in the property shall exceed the sum of
the judgment debtor's homestead plus the amount of any consensual liens on the property having priority
to the judgment. A bid shall not be accepted by the officer in charge of a sale under this section which
does not exceed the amount of the judgment debtor's homestead plus the amount of any consensual
liens on the property having a priority to the judgment plus the costs of the sale allowable under title 12.
After receipt of a sufficient bid, the officer shall sell the property. From the proceeds, the officer shall first
pay the amount of the homestead to the judgment debtor plus the amount of any consensual liens on the
property having a priority to the judgment and then pay the costs of the sale. The remaining proceeds
shall be applied in accordance with the provisions of section 12-1562, subsection A. If the sale does not
occur, either because of voluntary abandonment by the judgment creditor or because no sufficient bid is
made, the judgment creditor may not charge any costs or attorney fees incurred in connection with the
sale against the judgment debtor by addition to the judgment or otherwise.

Article 2 Personal Property Exemption
33-1121. Definitions
In this article, unless the context otherwise requires:
1. "Debtor" means an individual whether married or single utilizing property described in this
article for personal, family or household use.
2. "Process" means execution, attachment, garnishment, replevin, sale or any final process
issued from any court or any other judicial remedy provided for collection of debts.

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33-1121.01. Availability of exemptions
In the case of married persons, each spouse is entitled to the exemptions provided in this article, which
may be combined with the other spouse's exemption in the same property or taken in different exempt
property.
33-1122. Debtor’s property not exempt from process
The property declared exempt by this article is not exempt from process utilized to enforce a security
interest in or pledge of such property, or to obtain possession of leased property.
33-1123. Household furniture, furnishings and appliances
Household furniture and furnishings, household goods, including consumer electronic devices, and
household appliances personally used by the debtor or a dependent of the debtor and not otherwise
specifically prescribed in this chapter are exempt from process provided their aggregate fair market value
does not exceed six thousand dollars.
33-1124. Food, fuel and provisions
All food, fuel and provisions actually provided for the debtor's individual or family use for six months are
exempt from process.
33-1125. Personal items
The following property of a debtor used primarily for personal, family or household purposes shall be
exempt from process:
1. All wearing apparel not in excess of a fair market value of five hundred dollars.
2. All musical instruments provided for the debtor's individual or family use not in excess of an
aggregate fair market value of four hundred dollars.
3. Domestic pets, horses, milk cows and poultry not in excess of an aggregate fair market value
of eight hundred dollars.
4. All engagement and wedding rings not in excess of an aggregate fair market value of two
thousand dollars.
5. The library of a debtor, including books, manuals, published materials and personal documents
not in excess of an aggregate fair market value of two hundred fifty dollars.
6. One watch not in excess of a fair market value of one hundred fifty dollars.
7. One typewriter, one computer, one bicycle, one sewing machine, a family bible, a lot in any
burial ground, one shotgun or one rifle or one pistol, not in excess of an aggregate fair market
value of one thousand dollars.
8. Equity in one motor vehicle not in excess of six thousand dollars. If the debtor or debtor's
dependent is a person with a physical disability, the equity in the motor vehicle shall not exceed
twelve thousand dollars.
9. Professionally prescribed prostheses for the debtor or a dependent of the debtor, including a
wheelchair.
33-1126. Money benefits or proceeds; exception
A. The following property of a debtor is exempt from execution, attachment or sale on any process issued
from any court:
1. All money received by or payable to a surviving spouse or child on the life of a deceased
spouse, parent or legal guardian, not exceeding twenty thousand dollars.
2. The earnings of the minor child of a debtor or the proceeds of these earnings by reason of any
liability of the debtor not contracted for the special benefit of the minor child.
3. All monies received by or payable to a person entitled to receive child support or spousal
maintenance pursuant to a court order.
4. All money, proceeds or benefits of any kind to be paid in a lump sum or to be rendered on a
periodic or installment basis to the insured or any beneficiary under any policy of health, accident
or disability insurance or any similar plan or program of benefits in use by any employer, except
for premiums payable on the policy or debt of the insured secured by a pledge, and except for
collection of any debt or obligation for which the insured or beneficiary has been paid under the
plan or policy and except for payment of amounts ordered for support of a person from proceeds
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and benefits furnished in lieu of earnings that would have been subject to that order and subject
to any exemption applicable to earnings so replaced.
5. All money arising from any claim for the destruction of, or damage to, exempt property and all
proceeds or benefits of any kind arising from fire or other insurance on any property exempt
under this article.
6. The cash surrender value of life insurance policies where for a continuous unexpired period of
two years the policies have been owned by a debtor. The policy shall have named as beneficiary
the debtor's surviving spouse, child, parent, brother or sister. The policy may have named as
beneficiary any other family member who is a dependent, in the proportion that the policy names
any such beneficiary, except that, subject to the statute of limitations, the amount of any premium
that is recoverable or avoidable by a creditor pursuant to title 44, chapter 8, article 1, with interest
thereon, is not exempt. The exemption provided by this paragraph does not apply to a claim for
the payment of a debt of the insured or beneficiary that is secured by a pledge or assignment of
the cash value of the insurance policy or the proceeds of the policy. For the purposes of this
paragraph, "dependent" means a family member who is dependent on the insured debtor for not
less than half support.
7. An annuity contract where for a continuous unexpired period of two years that contract has
been owned by a debtor and has named as beneficiary the debtor, the debtor's surviving spouse,
child, parent, brother or sister, or any other dependent family member, except that, subject to the
statute of limitations, the amount of any premium, payment or deposit with respect to that contract
is recoverable or avoidable by a creditor pursuant to title 44, chapter 8, article 1 is not exempt.
The exemption provided by this paragraph does not apply to a claim for a payment of a debt of
the annuitant or beneficiary that is secured by a pledge or assignment of the contract or its
proceeds. For the purposes of this paragraph, "dependent" means a family member who is
dependent on the debtor for not less than half support.
8. Any claim for damages recoverable by any person by reason of any levy on or sale under
execution of that person's exempt personal property or by reason of the wrongful taking or
detention of that property by any person, and the judgment recovered for damages.
9. A total of three hundred dollars held in a single account in any one financial institution as
defined by section 6-101. The property declared exempt by this paragraph is not exempt from
normal service charges assessed against the account by the financial institution at which the
account is carried.
10. An interest in a college savings plan under section 529 of the internal revenue code of 1986,
either as the owner or as the beneficiary. This does not include money contributed to the plan
within two years before a debtor files for bankruptcy.
B. Any money or other assets payable to a participant in or beneficiary of, or any interest of any
participant or beneficiary in, a retirement plan under section 401(a), 403(a), 403(b), 408, 408A or 409 or a
deferred compensation plan under section 457 of the United States internal revenue code of 1986, as
amended, whether the beneficiary's interest arises by inheritance, designation, appointment or otherwise,
is exempt from all claims of creditors of the beneficiary or participant. This subsection does not apply to
any of the following:
1. An alternate payee under a qualified domestic relations order, as defined in section 414(p) of
the United States internal revenue code of 1986, as amended. The interest of any and all
alternate payees is exempt from any and all claims of any creditor of the alternate payee.
2. Amounts contributed within one hundred twenty days before a debtor files for bankruptcy.
3. The assets of bankruptcy proceedings filed before July 1, 1987.
C. Any person eighteen years of age or over, married or single, who resides within this state and who
does not exercise the homestead exemption under article 1 of this chapter may claim as a personal
property homestead exempt from all process prepaid rent, including security deposits as provided in
section 33-1321, subsection A, for the claimant's residence, not exceeding two thousand dollars.
D. This section does not exempt property from orders that are the result of a judgment for arrearages of
child support or for a child support debt.

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33-1127. School equipment
The library and philosophical and chemical or other apparatus belonging to a debtor and used for the
instruction of youth in any university, college, seminary of learning, or school shall be exempt from
execution, attachment or sale on any process issued from any court.
33-1128. Fire fighting equipment
All fire engines, hooks and ladders, with the carts, trucks, carriages, hose, buckets, implements and
apparatus appertaining thereto, and all furniture and uniforms of any fire company or department
organized under any law of this state shall be exempt from execution, attachment or sale on any process
issued from any court.
33-1129. Public property or property of a public character
All court houses, jails, public offices, buildings, lots, grounds and personal property, the fixtures, furniture,
books and papers and appurtenances belonging and pertaining to the jail and public offices belonging to
any county or any city of this state and all cemeteries, public squares, parks and places, public buildings,
town halls, markets, buildings for the use of fire departments and military organizations, and the lots and
grounds thereto belonging and appertaining, owned or held by any town or city or dedicated by such town
or city to health, ornament or public use, or for the use of any fire or military company organized under the
laws of this state shall be exempt from execution, attachment or sale on any process issued from any
court.
33-1130. Tools and equipment used in a commercial activity, trade, business or profession
The following tools and equipment of a debtor used in a commercial activity, trade, business or profession
shall be exempt from process:
1. The tools, equipment, instruments and books, including telephone numbers, client or customer
contact information, or marketing tools, such as websites, domain names or any other intangible
work product, in the possession of a debtor or the spouse of a debtor primarily used in, and
necessary to carry on or develop, the commercial activity, trade, business or profession of the
debtor or the debtor's spouse, not in excess of an aggregate fair market value of five thousand
dollars. For the purpose of this paragraph, tools do not include a motor vehicle primarily used by
a debtor for personal, family or household purposes such as transportation to and from the
debtor's place of employment.
2. Farm machinery, utensils, implements of husbandry, feed, seed, grain and animals not in
excess of an aggregate value of two thousand five hundred dollars belonging to a debtor whose
primary income is derived from farming.
3. All arms, uniforms and accoutrements required by law to be kept by a debtor.
33-1131. Definition; wages; salary; compensation
A. For the purposes of this section, "disposable earnings" means that remaining portion of a debtor's A.
For the purposes of this section, "disposable earnings" means that remaining portion of a debtor's wages,
salary or compensation for his personal services, including bonuses and commissions, or otherwise, and
includes payments pursuant to a pension or retirement program or deferred compensation plan, after
deducting from such earnings those amounts required by law to be withheld.
B. Except as provided in subsection C, the maximum part of the disposable earnings of a debtor for any
workweek which is subject to process may not exceed twenty-five per cent of disposable earnings for that
week or the amount by which disposable earnings for that week exceed thirty times the minimum hourly
wage prescribed by federal law in effect at the time the earnings are payable, whichever is less.
C. The exemptions provided in subsection B do not apply in the case of any order for the support of any
person. In such case, one-half of the disposable earnings of a debtor for any pay period is exempt from
process.
D. The exemptions provided in this section do not apply in the case of any order of any court of
bankruptcy under chapter XIII of the federal bankruptcy act or any debt due for any state or federal tax.

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33-1132. Waiver of exemption rights void
Notwithstanding any agreement to the contrary, a waiver of the exemption rights provided by this article
shall be void and unenforceable, except as specifically provided in section 33-1122 and when done with
notice.
33-1133. Other exemption laws
A. Nothing in this article shall be construed to displace other provisions of law which afford additional or
greater protection to a debtor's property.
B. Notwithstanding subsection A, in accordance with 11 U.S.C. 522 (b), residents of this state are not
entitled to the federal exemptions provided in 11 U.S.C. 522 (d). Nothing in this section affects the
exemptions provided to residents of this state by the constitution or statutes of this state.

Article 3 Exemption From Execution of Foreign Judgement
33-1151. Exemption from execution
A. In addition to any other exemption provided by law, all real, personal, tangible or intangible property of
a judgment debtor in this state is exempt from execution of a judgment in favor of another state for failure
to pay that state's income tax on benefits received from a pension or other retirement plan to the extent
those benefits were received while the judgment debtor was a resident of this state. The exempt property
may include community, joint or separate property of the judgment debtor.
B. If the judgment debtor dies or absconds and leaves a spouse or dependent any property that is exempt
under this section, the property remains exempt to the spouse or dependent.
C. A claim or judgment in favor of another state for failure to pay that state's income tax on benefits
received from a pension or other retirement plan to the extent those benefits were received while the
judgment debtor was a resident of this state is not a lien on any property in this state that is owned by a
resident of this state.
33-1152. Recording; effect
A. A person must claim the exemption under this article under oath and in writing that establishes that the
person is a resident of this state and particularly designates the real and personal property for which the
exemption is claimed. The claim shall be recorded in the office of the county recorder in the county where
the property is located.
B. From and after the date of recording the claim the property is exempt from process and from sale
under a judgment described in section 33-1151 existing before or after recording the claim, and any such
sale is void.
33-1153. Abandonment of exemption; maintenance of residency
A. A claim of exemption under this article may be abandoned by a declaration or grant of abandonment or
waiver or by permanent removal of the claimant from this state. A claimant may remove from this state for
up to two years without an abandonment or waiver of the exemption.
B. A declaration of abandonment, waiver or grant must be executed and acknowledged by the claimant
and is effective from and after the date it is recorded in the office of the county recorder in which the claim
of exemption was recorded.

Title 33, Chapter 9 CONDOMINIUMS
Article 1 General Provisions
33-1201. Applicability
This chapter applies to all condominiums created within this state without regard to the date the
condominium was created.
33-1202. Definitions
In the condominium documents, unless specifically provided otherwise or the context otherwise requires,
and in this chapter:
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1. "Affiliate of a declarant" means any person who controls, is controlled by or is under common
control with a declarant.
2. "Allocated interests" means the undivided interests in the common elements, the common
expense liability and votes in the association allocated to each unit.
3. "Articles of incorporation" means the instrument by which an incorporated association or unit
owners' association is formed and organized under this state's corporate statutes.
4. "Association" or "unit owners' association" means the unit owners' association organized under
section 33-1241.
5. "Board of directors" means the body, regardless of its name, designated in the declaration and
given general management powers to act on behalf of the association.
6. "Bylaws" means the bylaws required by section 33-1246.
7. "Common elements" means all portions of a condominium other than the units.
8. "Common expense liability" means the liability for common expenses allocated to each unit
pursuant to section 33-1217.
9. "Common expenses" means expenditures made by or financial liabilities of the association,
together with any allocations to reserves.
10. "Condominium" means real estate, portions of which are designated for separate ownership
and the remainder of which is designated for common ownership solely by the owners of the
separate portions. Real estate is not a condominium unless the undivided interests in the
common elements are vested in the unit owners.
11. "Condominium documents" means the declaration, bylaws, articles of incorporation, if any,
and rules, if any.
12. "Declarant" means any person or group of persons who reserves, is granted or succeeds to
any special declarant right.
13. "Declaration" means any instruments, however denominated, that create a condominium and
any amendments to those instruments.
14. "Development rights" means any right or combination of rights reserved by or granted to a
declarant in the declaration to do any of the following:
(a) Add real estate to a condominium.
(b) Create easements, units, common elements or limited common elements within a
condominium.
(c) Subdivide units, convert units into common elements or convert common elements
into units.
(d) Withdraw real estate from a condominium.
(e) Make the condominium part of a larger condominium or planned community.
(f) Amend the declaration during any period of declarant control, pursuant to section 331243, subsection E, to comply with applicable law or to correct any error or inconsistency
in the declaration, if the amendment does not adversely affect the rights of any unit
owner.
(g) Amend the declaration during any period of declarant control, pursuant to section 331243, subsection E, to comply with the rules or guidelines, in effect from time to time, of
any governmental or quasi-governmental entity or federal corporation guaranteeing or
insuring mortgage loans or governing transactions involving mortgage instruments.
15. "Identifying number" means a symbol or address that identifies one unit in a condominium.
16. "Leasehold condominium" means a condominium in which all or a portion of the real estate is
subject to a lease the expiration or termination of which will terminate the condominium or reduce
its size.
17. "Limited common element" means a portion of the common elements specifically designated
as a limited common element in the declaration and allocated by the declaration or by operation
of section 33-1212, paragraph 2 or 4 for the exclusive use of one or more but fewer than all of the
units.
18. "Person" means a natural person, corporation, business trust, estate, trust, partnership,
association, joint venture, government, governmental subdivision or agency, or other legal or
commercial entity. In the case of a subdivision trust, as defined in section 6-801, person means
the beneficiary of the trust who holds the right to subdivide, develop or sell the real estate rather
than the trust or trustee.
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19. "Real estate" means any legal, equitable, leasehold or other estate or interest in, over or
under land, including structures, fixtures and other improvements and interests which by custom,
usage or law pass with a conveyance of land though not described in the contract of sale or
instrument of conveyance. Real estate includes parcels with or without upper or lower boundaries
and spaces that may be filled with air or water.
20. "Rules" means the provisions, if any, adopted pursuant to the declaration or bylaws governing
maintenance and use of the units and common elements.
21. "Special declarant rights" means any right or combination of rights reserved by or granted to a
declarant in the declaration to do any of the following:
(a) Construct improvements provided for in the declaration.
(b) Exercise any development right.
(c) Maintain sales offices, management offices, signs advertising the condominium, and
models.
(d) Use easements through the common elements for the purpose of making
improvements within the condominium or within real estate which may be added to the
condominium.
(e) Appoint or remove any officer of the association or any board member during any
period of declarant control.
22. "Unit" means a portion of the condominium designated for separate ownership or occupancy.
23. "Unit owner" means a declarant or other person who owns a unit or, unless otherwise
provided in the lease, a lessee of a unit in a leasehold condominium whose lease expires
simultaneously with any lease the expiration or termination of which will remove the unit from the
condominium but does not include a person having an interest in a unit solely as security for an
obligation. In the case of a contract for conveyance, as defined in section 33-741, of real property,
unit owner means the purchaser of the unit.
33-1203. Variation
Except as expressly provided in this chapter, the provisions of this chapter shall not be varied by
agreement and rights conferred by this chapter shall not be waived. A person shall not use any device to
evade the limitations or prohibitions of this chapter.
33-1204. Separate titles and taxation
A. If there is a unit owner other than a declarant, each unit that has been created, together with its interest
in the common elements, constitutes for all purposes a separate parcel of real estate.
B. Except as provided in subsection C, if there is a unit owner other than a declarant, each unit shall be
separately taxed and assessed, and no separate tax or assessment may be rendered against any
common elements.
C. Any portion of the common elements which the declarant reserves the right to withdraw from the
condominium shall be separately taxed and assessed against the declarant and the declarant alone is
liable for payment of those taxes, as long as the declarant retains this right to withdraw.
D. If there is no unit owner other than a declarant, the real estate comprising the condominium shall be
taxed and assessed as a single parcel.
33-1205. Applicability of local ordinances, rules and building codes
A. A zoning, subdivision or building code or other real estate use law, ordinance or rule shall not prohibit a
condominium form of ownership or impose any requirement on a condominium which it would not impose
on a physically identical development under a different form of ownership.
B. Except as provided in subsection A, this chapter does not invalidate or modify any provision of any
zoning, subdivision or building code or other real estate use law, ordinance or rule.
33-1206. Eminent domain
A. If a unit is acquired by eminent domain, or if part of a unit is acquired by eminent domain leaving the
unit owner with a remnant which may not practically or lawfully be used for any purpose permitted by the
declaration, the award must compensate the unit owner for his unit and its interest in the common
elements, regardless of whether any common elements are acquired. On acquisition, unless the decree
otherwise provides, that unit's allocated interests are automatically reallocated to the remaining units in
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proportion to the respective allocated interests of those units before the taking, and the association shall
promptly prepare, execute and record an amendment to the declaration reflecting the reallocations. Any
remnant of a unit remaining after part of a unit is taken under this subsection becomes a common
element.
B. Except as provided in subsection A of this section, if part of a unit is acquired by eminent domain the
award must compensate the unit owner for the reduction in value of the unit and its interest in the
common elements, regardless of whether any common elements are acquired. On acquisition, unless the
decree otherwise provides, all of the following apply:
1. The unit's allocated interests are reduced in proportion to the reduction in the size of the unit or
on any other basis specified in the declaration.
2. The portion of the allocated interests divested from the partially acquired unit is automatically
reallocated to that unit and the remaining units in proportion to the respective allocated interests
of those units before the taking, with the partially acquired unit participating in the reallocation on
the basis of its reduced allocated interests.
C. If part of the common elements is acquired by eminent domain, the portion of the award attributable to
the common elements taken shall be paid to the association for the benefit of the unit owners. Unless the
declaration provides otherwise, any portion of the award attributable to the acquisition of a limited
common element shall be equally divided among the owners of the units to which that limited common
element was allocated at the time of acquisition.
D. The court decree shall be recorded in every county in which any portion of the condominium is located.
E. If all of the units of the condominium are acquired by eminent domain, the condominium is terminated
and the provisions of section 33-1228 apply.
F. This section does not restrict the rights of lessees, mortgagees, declarants or any other person holding
an interest in a unit or its common elements from receiving separate compensation or a portion of the
compensation payable, or both, pursuant to this section.
33-1207. Severability
If any provision of this chapter or its application to any person or circumstances is held invalid, the
invalidity does not affect other provisions or applications of the chapter which can be given effect without
the invalid provisions or application, and to this end the provisions of this chapter are severable.

Article 2 Creation, Alteration, and Termination of Condominiums
33-1211. Creation of condominium
A condominium may only be created pursuant to this chapter by recording a declaration in the same
manner as a deed in each county in which any portion of the condominium is located. The declaration
shall be indexed in the name of the condominium, the name of the association and otherwise as required
by law.
33-1212. Unit boundaries
Except as provided by the declaration:
1. If walls, floors or ceilings are designated as boundaries of a unit, all lath, furring, wallboard,
plasterboard, plaster, paneling, tiles, wallpaper, paint, finished flooring and any other materials
constituting any part of the finished surfaces are a part of the unit, and all other portions of the
walls, floors or ceilings are a part of the common elements.
2. If any chute, flue, duct, wire, conduit, bearing wall, bearing column or other fixture lies partially
within and partially outside the designated boundaries of a unit, any portion serving only that unit
is a limited common element allocated solely to that unit and any portion serving more than one
unit or any portion of the common elements is a part of the common elements.
3. Subject to the provisions of paragraph 2, all spaces, interior partitions and other fixtures and
improvements within the boundaries of a unit are a part of the unit.
4. Any shutters, awnings, window boxes, doorsteps, stoops, porches, balconies, entryways or
patios, and all exterior doors and windows or other fixtures designed to serve a single unit, but
located outside the unit's boundaries, are limited common elements allocated exclusively to that
unit.

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33-1213. Construction and validity of declaration and bylaws
A. All provisions of the condominium documents are severable.
B. The rule against perpetuities shall not be applied to defeat any provision of the condominium
documents.
C. Except to the extent inconsistent with this chapter:
1. If a conflict exists between the provisions of the declaration and the other condominium
documents, the declaration prevails.
2. If a conflict exists between the provisions of the articles of incorporation and the bylaws or
rules, the articles of incorporation prevail.
3. If a conflict exists between the provisions of the bylaws and the rules, the bylaws prevail.
D. Title to a unit and common elements is not rendered unmarketable or otherwise affected by reason of
an insubstantial failure of any condominium documents to comply with this chapter.
33-1214. Description of units
A description of a unit which sets forth the name of the condominium, the recording data for the
declaration, the county or counties in which the condominium is located and the identifying number of the
unit is a sufficient legal description of that unit and all common elements, rights, obligations and interests
appurtenant to that unit.
33-1215. Contents of declaration
A. The declaration shall contain:
1. The name of the condominium, which shall include the word "condominium" or be followed by
the words "a condominium", and the name of the association.
2. The name of every county in which any portion of the condominium is located.
3. A legal description of the real estate included in the condominium.
4. A description of the boundaries of each unit created by the declaration, including each unit's
identifying number.
5. A description of any limited common elements, other than those specified in section 33-1212,
paragraphs 2 and 4, but the declaration shall contain a description of any porches, balconies,
patios and entryways, if any, as provided in section 33-1219, subsection B, paragraph 11.
6. A description of any development rights and other special declarant rights, together with a legal
description of the real estate to which each of those rights applies, any time limit within which
each of those rights must be exercised and any other conditions or limitations under which the
rights described in this paragraph may be exercised or will lapse.
7. An allocation to each unit of the allocated interests in the manner described in section 33-1217.
8. Any restrictions on use, occupancy and alienation of the units.
9. All matters required by sections 33-1216, 33-1217, 33-1218, 33-1219 and 33-1226 and section
33-1243, subsection E.
10. A statement that the assessment obligation of the unit owner under section 33-1255 is
secured by a lien on the owner's unit in favor of the association pursuant to section 33-1256.
11. If the condominium is a conversion from multifamily rental to condominiums, a statement
containing all of the following:
(a) A statement that the property is a conversion from multifamily rental to condominiums.
(b) The date original construction was completed.
(c) The name and address of the original owner, builder, developer and general contractor as
shown on the applicable city, town or county building permit.
(d) The name and address of each subsequent owner as determined by a search of the county
recorder's records in the county in which the property is located.
(e) The subdivider's agreement to provide the following information on request:
(i) The name and address of any builder, developer, general contractor, subcontractor,
architect and engineer who designed or made improvements to the property immediately
before the first condominium was sold.
(ii) A specific description of all improvements made.
B. If a city, town or county is unable to produce a building permit as required in subsection A, paragraph
11, subdivision (c) of this section, the subdivider shall submit a letter from the applicable city, town or

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county stating that the information required by subsection A, paragraph 11, subdivision (c) of this section
is not available.
C. The declaration may contain any other matters the declarant deems appropriate.
33-1216. Leasehold condominiums
A. Any lease, the expiration or termination of which may terminate the condominium or reduce its size,
shall be recorded. Unless the lease otherwise specifically provides for the creation of a leasehold
condominium and the rights and benefits set forth in this section, each lessor of those leases shall sign or
otherwise consent to the provisions of the declaration. The declaration shall state all of the following:
1. The recording data for the lease.
2. The date on which the lease is scheduled to expire.
3. A legal description of the real estate subject to the lease.
4. Any right of the unit owners to acquire title to their units free of the lease or a statement that
they do not have this right.
5. Any right of the unit owners to remove any improvements within a reasonable time after the
expiration or termination of the lease or that they do not have this right.
6. Any rights of the unit owners to renew the lease and the conditions of any renewal or that they
do not have those rights.
B. After the declaration for a leasehold condominium is recorded, neither the lessor nor his successor in
interest may terminate the leasehold interest of a unit owner who makes timely payment of his share of
the rent and otherwise complies with all covenants which, if violated, would entitle the lessor to terminate
the lease. A unit owner's leasehold interest is not affected by failure of any other person to pay rent or
fulfill any other covenant.
C. Acquisition of the leasehold interest of any unit owner by the owner of the reversion or remainder does
not merge the leasehold and fee simple interests unless the leasehold interests of all unit owners subject
to that reversion or remainder are acquired.
D. If the expiration or termination of a lease decreases the number of units in a condominium, the
allocated interests shall be reallocated in accordance with section 33-1206, subsection A as though those
units had been taken by eminent domain.
33-1217. Allocation of common element interests, votes and common expense liabilities
A. The declaration shall allocate a fraction or percentage of undivided interests in the common elements
and in the common expenses of the association, and a portion of the votes in the association, to each unit
and state the formulas used to establish those allocations. Except as otherwise provided in this chapter,
the allocations shall not discriminate in favor of units owned by the declarant.
B. If units may be added to or withdrawn from the condominium, the declaration must state the formulas
to be used to reallocate the allocated interests among all units included in the condominium after the
addition or withdrawal.
C. The declaration may provide:
1. That different allocations of votes shall be made to the units on particular matters specified in
the declaration.
2. For cumulative voting only for the purpose of electing members of the board of directors.
3. For class voting on specified issues affecting the class if necessary to protect valid interests of
the class.
D. Except for minor variations due to rounding, the sum of the undivided interests in the common
elements and common expense liabilities allocated at any time to all the units must each equal one if
stated as fractions or one hundred per cent if stated as percentages. If a discrepancy exists between an
allocated interest and the result derived from application of the pertinent formula, the allocated interest
prevails.
E. Except as otherwise permitted by the provisions of this chapter, the common elements are not subject
to partition, and any purported conveyance, encumbrance, judicial sale or other voluntary or involuntary
transfer of an undivided interest in the common elements made without the unit to which that interest is
allocated is void.

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33-1218. Limited common elements
A. Except for the limited common elements described in section 33-1212, paragraphs 2 and 4, other than
porches, balconies, patios and entryways, the declaration shall specify to which unit or units each limited
common element is allocated. The allocation shall not be altered without the consent of the unit owners
whose units are affected.
B. Except as the declaration otherwise provides, a limited common element may be reallocated by an
amendment to the declaration. The amendment shall be executed by the unit owners between or among
whose units the reallocation is made, shall state the manner in which the limited common elements are to
be reallocated and, before recording the amendment, shall be submitted to the board of directors. Unless
the board of directors determines within thirty days that the proposed amendment is unreasonable, which
determination shall be in writing and specifically state the reasons for disapproval, the association shall
execute its approval and record the amendment.
C. A common element not previously allocated as a limited common element shall not be so allocated
except pursuant to provisions in the declaration. The allocations shall be made by amendments to the
declaration.
33-1219. Plat
A. The plat is a part of the declaration. The plat must be clear and legible.
B. The plat shall show:
1. The name of the condominium.
2. The boundaries of the condominium and a legal description of the real estate included in the
condominium.
3. The extent of any encroachments on any portion of the condominium.
4. To the extent feasible, the location and dimensions of all easements serving or burdening any
portion of the condominium.
5. The location and dimensions of the vertical boundaries of each unit, and each unit's identifying
number.
6. Any horizontal unit boundaries, with reference to an established datum, and each unit's
identifying number.
7. Any units with respect to which the declarant has reserved the right to create additional units or
common elements, identified appropriately.
8. The location and dimensions of all real estate subject to the development right of withdrawal
identified as such.
9. The location and dimensions of all real estate in which the unit owner will only own an estate
for years labeled as a "leasehold condominium".
10. The distance between noncontiguous parcels of real estate comprising the condominium.
11. The location and dimensions of limited common elements, including porches, balconies,
patios and entryways, other than the limited common elements described in section 33-1212,
paragraphs 2 and 4.
12. Any other matters the declarant deems appropriate.
C. Unless the declaration provides otherwise, the horizontal boundaries of a part of a unit located outside
of a building have the same elevation as the horizontal boundaries of the inside part and need not be
depicted on the plat.
D. On exercising any development right, the declarant shall record a new plat conforming to the
requirements of subsections A and B of this section. No new plat need be recorded if the development
right exercised was clearly depicted on the original plat and a document is recorded which references the
declaration and original plat and declares that the development right has been exercised.

33-1220. Exercise of development rights
A. To exercise a development right the declarant shall prepare, execute and record an amendment to the
declaration which shall include a new plat conforming to the requirements of section 33-1219,
subsections A and B, if the previously recorded plat does not show the boundaries of the parcel or
parcels as to which the development right is exercised. The amendment to the declaration shall assign an
identifying number to each new unit created and, except in the case of subdivision or conversion of units
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described in subsection C of this section, reallocate the allocated interests among all units. The
amendment shall describe any common elements and any limited common elements created and, in the
case of limited common elements, designate the unit to which each is allocated as required by section 331218.
B. Development rights may be reserved within any real estate added to the condominium if the
amendment adding that real estate includes all matters required by section 33-1215 or 33-1216,
whichever is applicable, and the plat includes all matters required by section 33-1219. This subsection
does not extend any time limit on the exercise of development rights imposed by the declaration pursuant
to section 33-1215, subsection A, paragraph 6.
C. Whenever a declarant exercises a development right to subdivide or convert a unit previously created
into additional units or common elements, or both:
1. If the declarant converts the unit entirely to common elements, the amendment to the
declaration must reallocate all the allocated interests of that unit among the other units as if that
unit had been taken by eminent domain.
2. If the declarant subdivides the unit into two or more units, whether any part of the unit is
converted into common elements, the amendment to the declaration shall reallocate all the
allocated interests of the unit among the units created by the subdivision in any reasonable
manner prescribed by the declarant.
D. If the declaration provides that all or a portion of the real estate is subject to the development right of
withdrawal:
1. If all the real estate is subject to withdrawal and the declaration does not describe separate
portions of the real estate subject to that right, none of the real estate may be withdrawn after a
unit has been conveyed to a purchaser without the written consent of all unit owners in the
condominium and any mortgagees or beneficiaries of deeds of trust or sellers under a contract,
as defined in section 33-741, for conveyance of real property encumbering the units.
2. If a portion or portions are subject to withdrawal, a portion shall not be withdrawn after a unit in
that portion has been conveyed to a purchaser without the written consent of all unit owners in
the condominium and any mortgagees or beneficiaries of deeds of trust or sellers under contract,
as defined in section 33-741, for conveyance of real property encumbering the units.
E. No development right shall be exercised in any manner which would eliminate or materially reduce in
size any tennis court, swimming pool, clubhouse or other recreational facility which is part of the common
elements and which was specified in the public report issued on the condominium by the commissioner of
the state real estate department, unless the exercise of the development right is approved by an
affirmative vote of the unit owners to which at least eighty per cent of the votes in the association are
allocated.

33-1221. Alterations of units
Subject to the provisions of the declaration and other provisions of law, a unit owner:
1. May make any improvements or alterations to his unit that do not impair the structural integrity
or mechanical systems or lessen the support of any portion of the condominium.
2. Shall not change the appearance of the common elements, or the exterior appearance of a unit
or any other portion of the condominium, without written permission of the association.
3. After acquiring an adjoining unit or, if the declaration expressly permits, an adjoining part of an
adjoining unit, may remove or alter any intervening partition or create apertures in intervening
partitions, even if the partition in whole or in part is a common element, if those acts do not impair
the structural integrity or mechanical systems or lessen the support of any portion of the
condominium. Removal of partitions or creation of apertures under this paragraph is not an
alteration of boundaries.
33-1222. Relocation of boundaries between adjoining units
If the declaration expressly permits, the boundaries between or among adjoining units may be relocated
by an amendment to the declaration. The owners of the units shall prepare an amendment to the
declaration, including the plat, that identifies the units involved, specifies the altered boundaries of the
units and their dimensions and includes the units' identifying numbers. If the owners of the adjoining units
have specified a reallocation between their units of the allocated interests, the amendment shall state the
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proposed reallocation in a reasonable manner. The amendment shall be executed by the owners of those
units, shall contain words of conveyance between or among them and, before recording the amendment,
shall be submitted to the board of directors. Unless the board of directors determines within thirty days
that the proposed amendment is unreasonable, which determination shall be in writing and specifically
state the reasons for disapproval, the association shall execute its approval and record the amendment.
33-1223. Subdivision of units
If the declaration expressly permits, a unit may be subdivided into two or more units. A unit owner shall
prepare an amendment to the declaration, including the plat, which identifies the unit involved, specifies
the boundaries of each unit created and its dimensions, assigns an identifying number to each unit
created and allocates the allocated interests formerly allocated to the subdivided unit to the new units in a
reasonable manner. The amendment shall be executed by the owner of the unit to be subdivided and,
before recording, submitted to the board of directors. Unless the board of directors determines within
thirty days that the proposed amendment is unreasonable, which determination shall be in writing and
specifically state the reasons for disapproval, the association shall execute its approval and record the
amendment.
33-1224. Easement for encroachments
To the extent that any unit or common element encroaches on any other unit or common element as a
result of original construction, shifting or settling, or alteration or restoration authorized by the declaration,
a valid easement for the encroachment exists.
33-1225. Use for sale purposes
A declarant may maintain sales offices, management offices and models in units or on common elements
in the condominium unless:
1. The declaration provides otherwise.
2. Such use is prohibited by another provision of law or local ordinances.
33-1226. Easement to facilitate exercise of special declarant rights
Subject to the provisions of the declaration, a declarant has an easement through the common elements
as may be reasonably necessary for the purpose of discharging a declarant's obligations or exercising
special declarant rights, whether arising under this chapter or reserved in the declaration.
33-1227. Amendment of declaration
A. Except in cases of amendments that may be executed by a declarant under section 33-1220, by the
association under section 33-1206 or section 33-1216, subsection D, or by certain unit owners under
section 33-1218, subsection B, section 33-1222, section 33-1223 or section 33-1228, subsection B, and
except to the extent permitted or required by other provisions of this chapter, the declaration, including
the plat, may be amended only by a vote of the unit owners to which at least sixty-seven per cent of the
votes in the association are allocated, or any larger majority the declaration specifies. The declaration
may specify a smaller percentage only if all of the units are restricted exclusively to nonresidential use.
The declaration may also provide that the consent of the declarant is required to an amendment during
any period of declarant control pursuant to section 33-1243. Within thirty days after the adoption of any
amendment pursuant to this subsection, the association shall prepare, execute and record a written
instrument setting forth the amendment.
B. An action to challenge the validity of an amendment adopted by the association pursuant to this
section shall not be brought more than one year after the amendment is recorded.
C. An amendment to the declaration shall be recorded in each county in which any portion of the
condominium is located and is effective only on recordation in the same manner as required for the
declaration under section 33-1211.
D. Except to the extent expressly permitted or required by other provisions of this chapter, an amendment
shall not create or increase special declarant rights, increase the number of units or change the
boundaries of any unit, the allocated interests of a unit or the uses to which any unit is restricted, in the
absence of unanimous consent of the unit owners.
E. An amendment shall not terminate or decrease any unexpired development right, special declarant
right or period of declarant control unless the declarant approves.
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F. Amendments to the declaration required by this chapter to be executed by the association shall be
executed on behalf of the association by any officer of the association designated for that purpose or, in
the absence of designation, by the president of the association.
33-1228. Termination of condominium
A. Except in the case of a taking of all the units by eminent domain, a condominium may be terminated
only by agreement of unit owners of units to which at least eighty per cent of the votes in the association
are allocated, or any larger percentage the declaration specifies. The declaration may specify a smaller
percentage only if all of the units in the condominium are restricted exclusively to nonresidential uses.
B. An agreement to terminate shall be evidenced by the execution or ratifications of a termination
agreement, in the same manner as a deed, by the requisite number of unit owners. The termination
agreement shall specify a date after which the agreement will be void unless it is recorded before that
date. A termination agreement and all ratifications of a termination agreement shall be recorded in each
county in which a portion of the condominium is situated and is effective only on recordation.
C. A termination agreement may provide that all the common elements and units of the condominium
shall be sold following termination. If, pursuant to the agreement, any real estate in the condominium is to
be sold following termination, the termination agreement shall set forth the minimum terms of the sale.
D. The association, on behalf of the unit owners, may contract for the sale of real estate in the
condominium, but the contract is not binding on the unit owners until approved pursuant to subsections A
and B. If any real estate in the condominium is to be sold following termination, title to that real estate on
termination vests in the association as trustee for the holders of all interest in the units. Thereafter, the
association has all powers necessary and appropriate to effect the sale. Until the sale has been
concluded and the proceeds of the sale distributed, the association continues in existence with all powers
it had before termination. Proceeds of the sale shall be distributed to unit owners and lienholders as their
interests may appear, in proportion to the respective interests of unit owners as provided in subsection G.
Unless otherwise specified in the termination agreement, as long as the association holds title to the real
estate, each unit owner and his successors in interest have an exclusive right to occupancy of the portion
of the real estate that formerly constituted his unit. During the period of that occupancy, each unit owner
and his successors in interest remain liable for all assessments and other obligations imposed on unit
owners by this chapter or the declaration.
E. If the real estate constituting the condominium is not to be sold following termination, title to all the real
estate in the condominium vests in the unit owners on termination as tenants in common in proportion to
their respective interests as provided in subsection G, and liens on the units shift accordingly. While the
tenancy in common exists, each unit owner and his successors in interest have an exclusive right to
occupancy of the portion of the real estate that formerly constituted his unit.
F. Following termination of the condominium, the proceeds of any sale of real estate, together with the
assets of the association, are held by the association as trustee for unit owners and holders of liens on
the units as their interests may appear. Following termination, creditors of the association holding liens on
the units which were recorded before termination may enforce those liens in the same manner as any
lienholder.
G. The respective interests of unit owners referred to in subsections D, E and F are as follows:
1. Except as provided in paragraph 2, the respective interests of unit owners are the fair market
values of their units, limited common elements and common element interests immediately before
the termination, as determined by an independent appraiser selected by the association. The
determination of the independent appraiser shall be distributed to the unit owners and becomes
final unless disapproved within thirty days after distribution by unit owners of units to which fifty
per cent of the votes in the association are allocated. The proportion of any unit owner's interest
to that of all unit owners is determined by dividing the fair market value of that unit owner's unit
and common element interest by the total fair market values of all the units and common
elements.
2. If any unit or any limited common element is destroyed to the extent that an appraisal of the fair
market value of the unit or element before destruction cannot be made, the interests of all unit
owners are their respective common element interests immediately before the termination.
H. Except as provided in subsection I, foreclosure or enforcement of a lien or encumbrance against the
entire condominium does not of itself terminate the condominium, and foreclosure or enforcement of a
lien or encumbrance against a portion of the condominium does not withdraw that portion from the
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condominium. Foreclosure or enforcement of a lien or encumbrance against withdrawable real estate
does not of itself withdraw that real estate from the condominium, but the person taking title may require
from the association, on request, an amendment excluding the real estate from the condominium.
I. If a lien or encumbrance against a portion of the real estate comprising the condominium has priority
over the declaration, and the lien or encumbrance has not been partially released, the parties foreclosing
the lien or encumbrance may, on foreclosure, record an instrument excluding the real estate subject to
that lien or encumbrance from the condominium.
J. The provisions of subsections C through I do not apply if the original declaration, an amendment to the
original declaration recorded before the conveyance of any unit to an owner other than the declarant or
an agreement by all of the unit owners contain provisions inconsistent with such subsections.
33-1229. Rights of secured lenders
The declaration may require that all or a specified number or percentage of the mortgagees, beneficiaries
of deeds of trust or sellers under contracts, as defined in section 33-741, for conveyance of real property
encumbering the units approve specified actions of the unit owners or the association as a condition to
the effectiveness of those actions, but requirement for approval shall not operate to either:
1. Deny or delegate control over the general administrative affairs of the association by the unit
owners or the board of directors.
2. Prevent the association or the board of directors from commencing, intervening in or settling
any litigation or proceeding, or receiving and distributing any insurance proceeds pursuant to
section 33-1253.
33-1230. Merger or consolidation of condominiums
A. Any two or more condominiums, by agreement of the unit owners as provided in subsection B, may be
merged or consolidated into a single condominium. In the event of a merger or consolidation, unless the
agreement otherwise provides, the resultant condominium is, for all purposes, the legal successor of all of
the preexisting condominiums and the operations and activities of all associations of the preexisting
condominiums shall be merged or consolidated into a single association which shall hold all powers,
rights, obligations, assets and liabilities of all preexisting associations.
B. An agreement of two or more condominiums to merge or consolidate pursuant to subsection A shall be
evidenced by an agreement prepared, executed, recorded and certified by the president of the
association of each of the preexisting condominiums following approval by owners of units to which are
allocated the percentage of votes in each condominium required to terminate that condominium. Any
such agreement shall be recorded in each county in which a portion of the condominium is located and is
not effective until recorded. A merger or consolidation of two or more condominiums shall be considered
an amendment to the declaration of each of the condominiums merged or consolidated.
C. Every merger or consolidation agreement shall provide for the reallocation of the allocated interests in
the new association among the units of the resultant condominium either by stating:
1. The reallocations or the formulas on which they are based.
2. The percentage of overall allocated interests of the new condominium which are allocated to all
of the units comprising each of the preexisting condominiums, and providing that the portion of
the percentages allocated to each unit formerly comprising a part of the preexisting condominium
must be equal to the percentages of allocated interests allocated to that unit by the declaration of
the preexisting condominiums.

Article 3 Management of the Condominium
33-1241. Organization of unit owners' association
A unit owners' association shall be organized no later than the date the first unit in the condominium is
conveyed. The membership of the association at all times shall consist exclusively of all the unit owners
or, following termination of the condominium, of all former unit owners entitled to distributions of proceeds
under section 33-1228, or their heirs, successors or assigns. The association shall be organized as a
profit or nonprofit corporation or as an unincorporated association.
33-1242. Powers of unit owners' association; notice to unit owner of violation
A. Subject to the provisions of the declaration, the association may:
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1. Adopt and amend bylaws and rules.
2. Adopt and amend budgets for revenues, expenditures and reserves and collect assessments
for common expenses from unit owners.
3. Hire and discharge managing agents and other employees, agents and independent
contractors.
4. Institute, defend or intervene in litigation or administrative proceedings in its own name on
behalf of itself or two or more unit owners on matters affecting the condominium.
5. Make contracts and incur liabilities.
6. Regulate the use, maintenance, repair, replacement and modification of common elements.
7. Cause additional improvements to be made as a part of the common elements.
8. Acquire, hold, encumber and convey in its own name any right, title or interest to real or
personal property, except that common elements may be conveyed or subjected to a security
interest only pursuant to section 33-1252.
9. Grant easements, leases, licenses and concessions through or over the common elements.
10. Impose and receive any payments, fees or charges for the use, rental or operation of the
common elements other than limited common elements described in section 33-1212,
paragraphs 2 and 4 and for services provided to unit owners.
11. Impose charges for late payment of assessments after the association has provided notice
that the assessment is overdue or provided notice that the assessment is considered overdue
after a certain date and, after notice and an opportunity to be heard, impose reasonable monetary
penalties on unit owners for violations of the declaration, bylaws and rules of the association.
12. Impose reasonable charges for the preparation and recordation of amendments to the
declaration or statements of unpaid assessments.
13. Provide for the indemnification of its officers and executive board of directors and maintain
directors' and officers' liability insurance.
14. Assign its right to future income, including the right to receive common expense assessments,
but only to the extent the declaration expressly provides.
15. Be a member of a master association or other entity owning, maintaining or governing in any
respect any portion of the common elements or other property benefitting or related to the
condominium or the unit owners in any respect.
16. Exercise any other powers conferred by the declaration or bylaws.
17. Exercise all other powers that may be exercised in this state by legal entities of the same type
as the association.
18. Exercise any other powers necessary and proper for the governance and operation of the
association.
B. A unit owner who receives a written notice that the condition of the property owned by the unit owner is
in violation of a requirement of the condominium documents without regard to whether a monetary
penalty is imposed by the notice may provide the association with a written response by sending the
response by certified mail within twenty-one calendar days after the date of the notice. The response
shall be sent to the address identified in the notice.
C. Within ten business days after receipt of the certified mail containing the response from the unit owner,
the association shall respond to the unit owner with a written explanation regarding the notice that shall
provide at least the following information unless previously provided in the notice of violation:
1. The provision of the condominium documents that has allegedly been violated.
2. The date of the violation or the date the violation was observed.
3. The first and last name of the person or persons who observed the violation.
4. The process the unit owner must follow to contest the notice.
D. Unless the information required in subsection C, paragraph 4 of this section is provided in the notice of
violation, the association shall not proceed with any action to enforce the condominium documents,
including the collection of attorney fees, before or during the time prescribed by subsection C of this
section regarding the exchange of information between the association and the unit owner and shall give
the unit owner written notice of the unit owner's option to petition for an administrative hearing on the
matter in the state real estate department pursuant to section 32-2199.01. At any time before or after
completion of the exchange of information pursuant to this section, the unit owner may petition for a
hearing pursuant to section 32-2199.01 if the dispute is within the jurisdiction of the state real estate
department as prescribed in section 32-2199.01.
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33-1243. Board of directors and officers; conflict; powers; limitations; removal; annual audit;
applicability
A. Except as provided in the declaration, the bylaws, subsection B of this section or other provisions of
this chapter, the board of directors may act in all instances on behalf of the association.
B. The board of directors shall not act on behalf of the association to amend the declaration, terminate the
condominium, elect members of the board of directors or determine the qualifications, powers and duties
or terms of office of board of directors members. Except as provided in subsection H of this section, the
board of directors may fill vacancies in its membership for the unexpired portion of any term.
C. If any contract, decision or other action for compensation taken by or on behalf of the board of
directors would benefit any member of the board of directors or any person who is a parent, grandparent,
spouse, child or sibling of a member of the board of directors or a parent or spouse of any of those
persons, that member of the board of directors shall declare a conflict of interest for that issue. The
member shall declare the conflict in an open meeting of the board before the board discusses or takes
action on that issue and that member may then vote on that issue. Any contract entered into in violation
of this subsection is void and unenforceable.
D. Except as provided in the declaration, within thirty days after adoption of any proposed budget for the
condominium, the board of directors shall provide a summary of the budget to all the unit owners. Unless
the board of directors is expressly authorized in the declaration to adopt and amend budgets from time to
time, any budget or amendment shall be ratified by the unit owners in accordance with the procedures set
forth in this subsection. If ratification is required, the board of directors shall set a date for a meeting of the
unit owners to consider ratification of the budget not fewer than fourteen nor more than thirty days after
mailing of the summary. Unless at that meeting a majority of all the unit owners or any larger vote
specified in the declaration rejects the budget, the budget is ratified, whether or not a quorum is present.
If the proposed budget is rejected, the periodic budget last ratified by the unit owners shall be continued
until such time as the unit owners ratify a subsequent budget proposed by the board of directors.
E. The declaration may provide for a period of declarant control of the association, during which period a
declarant or persons designated by the declarant may appoint and remove the officers and members of
the board of directors. Regardless of the period provided in the declaration, a period of declarant control
terminates no later than the earlier of:
1. Ninety days after conveyance of seventy-five percent of the units that may be created to unit
owners other than a declarant.
2. Four years after all declarants have ceased to offer units for sale in the ordinary course of
business.
F. A declarant may voluntarily surrender the right to appoint and remove officers and members of the
board of directors before termination of the period prescribed in subsection E of this section, but in that
event the declarant may require, for the duration of the period of declarant control, that specified actions
of the association or board of directors, as described in a recorded instrument executed by the declarant,
be approved by the declarant before they become effective.
G. Not later than the termination of any period of declarant control the unit owners shall elect a board of
directors of at least three members, at least a majority of whom must be unit owners. The board of
directors shall elect the officers. The board members and officers shall take office on election.
H. Notwithstanding any provision of the declaration or bylaws to the contrary, all of the following apply to
a meeting at which a member of the board of directors, other than a member appointed by the declarant,
is proposed to be removed from the board of directors:
1. The unit owners who are eligible to vote at the time of the meeting may remove any member of
the board of directors, other than a member appointed by the declarant, by a majority vote of
those voting on the matter at a meeting of the unit owners.
2. The meeting of the unit owners shall be called pursuant to this section and action may be taken
only if a quorum is present.
3. The unit owners may remove any member of the board of directors with or without cause, other
than a member appointed by the declarant.
4. For purposes of calling for removal of a member of the board of directors, other than a member
appointed by the declarant, the following apply:
(a) In an association with one thousand or fewer members, on receipt of a petition that
calls for removal of a member of the board of directors and that is signed by the number
of persons who are eligible to vote in the association at the time the person signs the
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petition equal to at least twenty-five percent of the votes in the association or by the
number of persons who are eligible to vote in the association at the time the person signs
the petition equal to at least one hundred votes in the association, whichever is less, the
board shall call and provide written notice of a special meeting of the association as
prescribed by section 33-1248, subsection B.
(b) Notwithstanding section 33-1248, subsection B, in an association with more than one
thousand members, on receipt of a petition that calls for removal of a member of the
board of directors and that is signed by the number of persons who are eligible to vote in
the association at the time the person signs the petition equal to at least ten percent of
the votes in the association or by the number of persons who are eligible to vote in the
association at the time the person signs the petition equal to at least one thousand votes
in the association, whichever is less, the board shall call and provide written notice of a
special meeting of the association. The board shall provide written notice of a special
meeting as prescribed by section 33-1248, subsection B.
(c) The special meeting shall be called, noticed and held within thirty days after receipt of
the petition.
(d) For purposes of a special meeting called pursuant to this subsection, a quorum is
present if the number of owners who are eligible to vote in the association at the time the
person attends the meeting equal to at least twenty percent of the votes of the
association or the number of persons who are eligible to vote in the association at the
time the person attends the meeting equal to at least one thousand votes, whichever is
less, is present at the meeting in person or as otherwise permitted by law.
(e) If a civil action is filed regarding the removal of a board member, the prevailing party
in the civil action shall be awarded its reasonable attorney fees and costs.
(f) The board of directors shall retain all documents and other records relating to the
proposed removal of the member of the board of directors and any election or other
action taken for that director's replacement for at least one year after the date of the
special meeting and shall permit members to inspect those documents and records
pursuant to section 33-1258.
(g) A petition that calls for the removal of the same member of the board of directors shall
not be submitted more than once during each term of office for that member.
5. On removal of at least one but fewer than a majority of the members of the board of directors
at a special meeting of the membership called pursuant to this subsection, the vacancies shall be
filled as provided in the condominium documents.
6. On removal of a majority of the members of the board of directors at a special meeting of the
membership called pursuant to this subsection, or if the condominium documents do not provide
a method for filling board vacancies, the association shall hold an election for the replacement of
the removed directors at a separate meeting of the members of the association that is held not
later than thirty days after the meeting at which the members of the board of directors were
removed.
7. A member of the board of directors who is removed pursuant to this subsection is not eligible to
serve on the board of directors again until after the expiration of the removed board member's
term of office, unless the condominium documents specifically provide for a longer period of
ineligibility.
I. For an association in which board members are elected from separately designated voting districts, a
member of the board of directors, other than a member appointed by the declarant, may be removed only
by a vote of the members from that voting district, and only the members from that voting district are
eligible to vote on the matter or be counted for purposes of determining a quorum.
J. Unless any provision in the condominium documents requires an annual audit by a certified public
accountant, the board of directors shall provide for an annual financial audit, review or compilation of the
association. The audit, review or compilation shall be completed no later than one hundred eighty days
after the end of the association's fiscal year and shall be made available on request to the unit owners
within thirty days after its completion.
K. This section does not apply to timeshare plans or associations, or the period of declarant control under
timeshare instruments, that are subject to chapter 20 of this title.

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33-1244. Transfer of special declarant rights
A. A special declarant right created or reserved under this chapter shall not be transferred except by an
instrument evidencing the transfer recorded in every county in which any portion of the condominium is
located. The instrument is not effective unless executed by the transferee.
B. On transfer of any special declarant right, the liability of a transferor declarant is as follows:
1. A transferor is not relieved of any obligation or liability arising before the transfer.
2. If a transferor retains any special declarant right, the transferor is liable for any obligations or
liabilities imposed on a declarant by this chapter or by the declaration relating to the retained
special declarant rights and arising after the transfer.
3. A transferor has no liability for any act or omission or any breach of a contractual or warranty
obligation arising from the exercise of a special declarant right by a successor declarant.
C. Unless otherwise provided in a mortgage or deed of trust, in case of foreclosure of a mortgage, tax
sale, judicial sale, sale by a trustee under a deed of trust, forfeiture of interest of a purchaser under a
contract for conveyance of real property or sale under bankruptcy code or receivership proceedings, of
any units owned by a declarant or real estate in a condominum subject to development rights, a person
acquiring title to all the real estate being foreclosed or sold succeeds to all special declarant rights related
to that real estate held by that declarant whether or not the judgment or instrument conveying title
provides for transfer of the special declarant rights.
D. The liabilities and obligations of a person who succeeds to special declarant rights are as follows:
1. A successor to any special declarant right, other than a successor described in paragraph 2 of
this subsection, is subject to all liabilities and obligations imposed by this chapter or the
declaration:
(a) On a declarant which relate to his exercise or nonexercise of special declarant rights.
(b) On his transferor, other than:
(i) Misrepresentations by any previous declarant.
(ii) Warranty obligations on improvements made by any previous declarant or
made before the condominium was created.
(iii) Breach of any fiduciary obligation by any previous declarant or his appointees
to the board of directors.
(iv) Any liability or obligation imposed on the transferor as a result of the
transferor's acts or omissions after the transfer.
2. A successor to special declarant rights under subsection C is subject to liability only for his own
acts in the exercise of those special declarant rights.
33-1245. Termination of contracts and leases of declarant; applicability
A. A contract for any of the following, if entered into before the board of directors elected by the unit
owners pursuant to section 33-1243, subsection G takes office, shall contain a provision in the contract
that the contract may be terminated without penalty by the association at any time after the board of
directors elected by the unit owners takes office:
1. Any management contract or employment contract.
2. Any other contract or lease between the association and a declarant or an affiliate of a
declarant.
3. Any contract or lease that is not bona fide or was unconscionable to the unit owners at the time
entered into under the circumstances then prevailing.
B. The board of directors shall notify the appropriate contractual party of the termination at least thirty
days before termination.
C. This section does not apply to any lease if the termination of the lease would terminate the
condominium or reduce its size.
D. If a contract covered by this section fails to contain the provisions required by subsection A of this
section, the contract is voidable at the option of the association.
E. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this
title.
33-1246. Bylaws
A. At the time the unit owners' association is organized, the association shall adopt bylaws which provide
for each of the following:
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1. The number of members of the board of directors and the titles of the officers of the
association.
2. Election by the board of directors of a president, treasurer, secretary and any other officers of
the association which the bylaws specify.
3. The qualifications, powers and duties, terms of office and manner of electing and removing
board members and officers and filling vacancies.
4. Which, if any, of its powers the board of directors or officers may delegate to other persons or
to a managing agent.
5. Which of its officers may execute, certify and record amendments to the declaration on behalf
of the association.
6. The method of amending the bylaws.
B. Subject to the provisions of the declaration, the bylaws may provide for any other matters the
association deems necessary and appropriate.
33-1247. Upkeep of the condominium
A. Except to the extent provided by the declaration, subsection C of this section or section 33-1253,
subsection B, the association is responsible for maintenance, repair and replacement of the common
elements and each unit owner is responsible for maintenance, repair and replacement of the unit. On
reasonable notice, each unit owner shall afford to the association and the other unit owners, and to their
agents or employees, access through the unit reasonably necessary for those purposes. If damage is
inflicted on the common elements or any unit through which access is taken, the unit owner responsible
for the damage, or the association if it is responsible, is liable for the prompt repair of the damage.
B. For any residential rental units that have been declared a slum property by the city or town pursuant to
section 33-1905 and that are in the condominium complex, the association is responsible for enforcing
any requirement for a licensed property management firm that is imposed by a city or town pursuant to
section 33-1906.
C. In addition to the liability borne by the declarant as a unit owner under this chapter, the declarant
alone is liable for the maintenance, repair and replacement of any portion of the common elements which
the declarant reserves the right to withdraw from the condominium, as long as the unit owner maintains
that right.
33-1248. Open meetings; exceptions
A. Notwithstanding any provision in the declaration, bylaws or other documents to the contrary, all
meetings of the unit owners' association and the board of directors, and any regularly scheduled
committee meetings, are open to all members of the association or any person designated by a member
in writing as the member's representative and all members or designated representatives so desiring shall
be permitted to attend and speak at an appropriate time during the deliberations and proceedings. The
board may place reasonable time restrictions on those persons speaking during the meeting but shall
permit a member or a member's designated representative to speak once after the board has discussed a
specific agenda item but before the board takes formal action on that item in addition to any other
opportunities to speak. The board shall provide for a reasonable number of persons to speak on each
side of an issue. Persons attending may audiotape or videotape those portions of the meetings of the
board of directors and meetings of the members that are open. The board of directors of the association
shall not require advance notice of the audiotaping or videotaping and may adopt reasonable rules
governing the audiotaping or videotaping of open portions of the meetings of the board and the
membership, but such rules shall not preclude such audiotaping or videotaping by those attending, unless
the board audiotapes or videotapes the meeting and makes the unedited audiotapes or videotapes
available to members on request without restrictions on its use as evidence in any dispute resolution
process. Any portion of a meeting may be closed only if that portion of the meeting is limited to
consideration of one or more of the following:
1. Legal advice from an attorney for the board or the association. On final resolution of any matter
for which the board received legal advice or that concerned pending or contemplated litigation,
the board may disclose information about that matter in an open meeting except for matters that
are required to remain confidential by the terms of a settlement agreement or judgment.
2. Pending or contemplated litigation.

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3. Personal, health or financial information about an individual member of the association, an
individual employee of the association or an individual employee of a contractor for the
association, including records of the association directly related to the personal, health or
financial information about an individual member of the association, an individual employee of the
association or an individual employee of a contractor for the association.
4. Matters relating to the job performance of, compensation of, health records of or specific
complaints against an individual employee of the association or an individual employee of a
contractor of the association who works under the direction of the association.
5. Discussion of a unit owner's appeal of any violation cited or penalty imposed by the association
except on request of the affected unit owner that the meeting be held in an open session.
B. Notwithstanding any provision in the condominium documents, all meetings of the unit owners'
association and the board shall be held in this state. A meeting of the unit owners' association shall be
held at least once each year. Special meetings of the unit owners' association may be called by the
president, by a majority of the board of directors or by unit owners having at least twenty-five percent, or
any lower percentage specified in the bylaws, of the votes in the association. Not fewer than ten nor
more than fifty days in advance of any meeting of the unit owners, the secretary shall cause notice to be
hand delivered or sent prepaid by United States mail to the mailing address of each unit or to any other
mailing address designated in writing by the unit owner. The notice of any meeting of the unit owners
shall state the date, time and place of the meeting. The notice of any annual, regular or special meeting of
the unit owners shall also state the purpose for which the meeting is called, including the general nature
of any proposed amendment to the declaration or bylaws, any changes in assessments that require
approval of the unit owners and any proposal to remove a director or officer. The failure of any unit owner
to receive actual notice of a meeting of the unit owners does not affect the validity of any action taken at
that meeting.
C. Before entering into any closed portion of a meeting of the board of directors, or on notice of a meeting
under subsection D of this section that will be closed, the board shall identify the paragraph under
subsection A of this section that authorizes the board to close the meeting.
D. Notwithstanding any provision in the declaration, bylaws or other condominium documents, for
meetings of the board of directors that are held after the termination of declarant control of the
association, notice to unit owners of meetings of the board of directors shall be given at least forty-eight
hours in advance of the meeting by newsletter, conspicuous posting or any other reasonable means as
determined by the board of directors. An affidavit of notice by an officer of the association is prima facie
evidence that notice was given as prescribed by this section. Notice to unit owners of meetings of the
board of directors is not required if emergency circumstances require action by the board before notice
can be given. Any notice of a board meeting shall state the date, time and place of the meeting. The
failure of any unit owner to receive actual notice of a meeting of the board of directors does not affect the
validity of any action taken at that meeting.
E. Notwithstanding any provision in the declaration, bylaws or other condominium documents, for
meetings of the board of directors that are held after the termination of declarant control of the
association, all of the following apply:
1. The agenda shall be available to all unit owners attending.
2. An emergency meeting of the board of directors may be called to discuss business or take
action that cannot be delayed for the forty-eight hours required for notice. At any emergency
meeting called by the board of directors, the board of directors may act only on emergency
matters. The minutes of the emergency meeting shall state the reason necessitating the
emergency meeting. The minutes of the emergency meeting shall be read and approved at the
next regularly scheduled meeting of the board of directors.
3. A quorum of the board of directors may meet by means of a telephone conference if a
speakerphone is available in the meeting room that allows board members and unit owners to
hear all parties who are speaking during the meeting.
4. Any quorum of the board of directors that meets informally to discuss association business,
including workshops, shall comply with the open meeting and notice provisions of this section
without regard to whether the board votes or takes any action on any matter at that informal
meeting.
F. It is the policy of this state as reflected in this section that all meetings of a condominium, whether
meetings of the unit owners' association or meetings of the board of directors of the association, be
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conducted openly and that notices and agendas be provided for those meetings that contain the
information that is reasonably necessary to inform the unit owners of the matters to be discussed or
decided and to ensure that unit owners have the ability to speak after discussion of agenda items, but
before a vote of the board of directors or members is taken. Toward this end, any person or entity that is
charged with the interpretation of these provisions, including members of the board or directors and any
community manager, shall take into account this declaration of policy and shall construe any provision of
this section in favor of open meetings.
G. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this
title.
33-1249. Quorums; applicability
A. Unless the bylaws provide otherwise, a quorum is present throughout any meeting of the association if
persons entitled to cast at least twenty-five per cent of the votes in the association are present in person
or by proxy at the beginning of the meeting.
B. Unless the bylaws specify a larger percentage, a quorum is deemed present throughout any meeting
of the board of directors if persons entitled to cast at least fifty per cent of the votes on that board are
present at the beginning of the meeting.
C. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this
title.
33-1250. Voting; proxies; absentee ballots; applicability; definition
A. If only one of the multiple owners of a unit is present at a meeting of the association, the owner is
entitled to cast all the votes allocated to that unit. If more than one of the multiple owners are present, the
votes allocated to that unit may be cast only in accordance with the agreement of a majority in interest of
the multiple owners unless the declaration expressly provides otherwise. There is majority agreement if
any one of the multiple owners casts the votes allocated to that unit without protest being made promptly
to the person presiding over the meeting by any of the other owners of the unit.
B. During the period of declarant control, votes allocated to a unit may be cast pursuant to a proxy duly
executed by a unit owner. If a unit is owned by more than one person, each owner of the unit may vote or
register protest to the casting of votes by the other owners of the unit through a duly executed proxy. A
unit owner may not revoke a proxy given pursuant to this section except by actual notice of revocation to
the person presiding over a meeting of the association. A proxy is void if it is not dated or purports to be
revocable without notice. The proxy is revoked on presentation of a later dated proxy executed by the
same unit owner. A proxy terminates one year after its date, unless it specifies a shorter term or unless it
states that it is coupled with an interest and is irrevocable.
C. Notwithstanding any provision in the condominium documents, after termination of the period of
declarant control, votes allocated to a unit may not be cast pursuant to a proxy. The association shall
provide for votes to be cast in person and by absentee ballot and, in addition, the association may provide
for voting by some other form of delivery, including the use of e-mail and fax delivery. Notwithstanding
section 10-3708 or the provisions of the condominium documents, any action taken at an annual, regular
or special meeting of the members shall comply with all of the following if absentee ballots or ballots
provided by some other form of delivery are used:
1. The ballot shall set forth each proposed action.
2. The ballot shall provide an opportunity to vote for or against each proposed action.
3. The ballot is valid for only one specified election or meeting of the members and expires
automatically after the completion of the election or meeting.
4. The ballot specifies the time and date by which the ballot must be delivered to the board of
directors in order to be counted, which shall be at least seven days after the date that the board
delivers the unvoted ballot to the member.
5. The ballot does not authorize another person to cast votes on behalf of the member.
6. The completed ballot shall contain the name, the address and either the actual or electronic
signature of the person voting, except that if the condominium documents permit secret ballots,
only the envelope shall contain the name, the address and either the actual or electronic
signature of the voter.

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7. Ballots, envelopes and related materials, including sign-in sheets if used, shall be retained in
electronic or paper format and made available for unit owner inspection for at least one year after
completion of the election.
D. Votes cast by absentee ballot or other form of delivery, including the use of e-mail and fax delivery, are
valid for the purpose of establishing a quorum.
E. Notwithstanding subsection C of this section, an association for a timeshare plan as defined in section
32-2197 may permit votes by a proxy that is duly executed by a unit owner.
F. If the declaration requires that votes on specified matters affecting the condominium be cast by lessees
rather than unit owners of leased units all of the following apply:
1. The provisions of subsections A and B of this section apply to lessees as if they were unit
owners.
2. Unit owners who have leased their units to other persons shall not cast votes on those
specified matters.
3. Lessees are entitled to notice of meetings, access to records and other rights respecting those
matters as if they were unit owners. Unit owners shall also be given notice, in the manner
prescribed in section 33-1248, of all meetings at which lessees may be entitled to vote.
G. Unless the declaration provides otherwise, votes allocated to a unit owned by the association shall not
be cast.
H. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this
title.
I. For the purposes of this section, "period of declarant control" means the time during which the declarant
or persons designated by the declarant may elect or appoint the members of the board of directors
pursuant to the condominium documents or by virtue of superior voting power.
33-1251. Tort and contract liability
A. An action alleging a wrong done by the association shall be brought against the association and not
against any unit owner.
B. A statute of limitation affecting any right of action of the association against the declarant is tolled until
the period of declarant control terminates.
C. A unit owner is not precluded from bringing an action against the association because he is a unit
owner or a member or officer of the association.
D. Liens resulting from judgments against the association are governed by section 33-1256.
33-1252. Conveyance or encumbrance of common elements
A. Portions of the common elements may be conveyed or subjected to a mortgage, deed of trust or
security interest by the association if persons entitled to cast at least eighty per cent of the votes in the
association, or any larger percentage the declaration specifies, agree to that action in the manner
prescribed in subsection B, except that all the owners of units to which any limited common element is
allocated must agree in order to convey that limited common element or subject it to a mortgage, deed of
trust or security interest. The declaration may specify a smaller percentage only if all of the units in the
condominium are restricted exclusively to nonresidential uses. Proceeds of the sale or encumbrance of
the common elements are an asset of the association.
B. An agreement to convey common elements or subject them to a mortgage, deed of trust or security
interest shall be evidenced by the execution of an agreement, or ratifications of the agreement, in the
same manner as a deed, by the requisite number of unit owners. The agreement shall specify a date after
which the agreement will be void unless previously recorded. The agreement and all ratifications of the
agreement shall be recorded in each county in which a portion of the condominium is situated and are
effective only on recordation.
C. The association, on behalf of the unit owners, may contract to convey common elements or subject
them to a mortgage, deed of trust or security interest, but the contract is not enforceable against the
association until approved pursuant to subsections A and B. Thereafter, the association has all powers
necessary and appropriate to effect the conveyance or encumbrance, including the power to execute
deeds or other instruments.
D. Except as permitted in this chapter, any purported conveyance, encumbrance, judicial sale or other
voluntary transfer of common elements is void.

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E. A conveyance or encumbrance of common elements pursuant to this section does not deprive any unit
of its rights of access and support.
F. A conveyance or encumbrance of common elements pursuant to this section does not affect the
priority or validity of preexisting encumbrances.
33-1252.01. Conveyance of certain real property
A. Real property that is held as an asset of the association and that is not held as a common element of
the condominium may be conveyed by the association if persons entitled to cast at least eighty per cent
of the votes in the association, or any larger percentage the declaration specifies, agree to the
conveyance in the manner prescribed in subsection B.
B. An agreement to convey real property that is held as an asset of the association and that is not held as
a common element of the condominium shall be evidenced by the execution of an agreement, or
ratifications of the agreement, in the same manner as a deed and by the requisite number of unit owners.
The agreement shall specify a date after which the agreement will be void unless previously recorded.
The agreement and all ratifications of the agreement shall be recorded in each county in which a portion
of the condominium is situated and are effective only on recordation.
C. The association, on behalf of the unit owners, may contract to convey the real property but the contract
is not enforceable against the association until approved pursuant to subsections A and B. Thereafter,
the association has all powers necessary and appropriate to effect the conveyance, including the power
to execute deeds or other instruments.
D. Except as permitted in this chapter, any purported conveyance or other voluntary transfer of real
property is void.
E. A conveyance of real property pursuant to this section does not affect the priority or validity of
preexisting encumbrances.
F. Property an association acquires in an assessment lien foreclosure action shall not be considered real
property held as an asset of the association for the purpose of this section.
33-1253. Insurance
A. Commencing not later than the time of the first conveyance of a unit to a person other than a declarant,
the association shall maintain, to the extent reasonably available, both:
1. Property insurance on the common elements insuring against all risks of direct physical loss
commonly insured against or, as determined by the board of directors against fire and extended
coverage perils. The total amount of insurance after application of any deductibles shall be not
less than eighty per cent of the actual cash value of the insured property at the time the insurance
is purchased and at each renewal date, exclusive of land, excavations, foundations and other
items normally excluded from property policies.
2. Liability insurance in an amount determined by the board of directors but not less than any
amount specified in the declaration, covering all occurrences commonly insured against for death,
bodily injury and property damage arising out of or in connection with the use, ownership or
maintenance of the common elements.
B. To the extent available, the insurance maintained under subsection A, paragraph 1 of this section, if
determined by the board, includes the units or any portion of those units but need not include
improvements and betterments installed by unit owners or the personal property of unit owners.
C. If the insurance described in subsection A of this section is not reasonably available, the association
promptly shall cause notice of that fact to be hand-delivered or sent prepaid by United States mail to all
unit owners. The declaration may require the association to carry any other insurance, and the
association in any event may carry any other insurance it deems appropriate to protect the association or
the unit owners.
D. Insurance policies carried pursuant to subsection A of this section shall provide the following:
1. Each unit owner is an insured person under the policy with respect to liability arising out of his
interest in the common elements or membership in the association.
2. The insurer waives its right to subrogation under the policy against any unit owner or members
of his household.
3. No act or omission by any unit owner, unless acting within the scope of his authority on behalf
of the association, will void the policy or be a condition to recovery under the policy.

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4. If, at the time of a loss under the policy, there is other insurance in the name of a unit owner
covering the same property covered by the policy, the association's policy provides primary
insurance.
E. Any loss covered by the property policy under subsection A, paragraph 1 and subsection B of this
section shall be adjusted with the association, but the insurance proceeds for that loss are payable to any
insurance trustee designated for that purpose, or otherwise to the association, and not to any mortgagee
or beneficiary under a deed of trust. The insurance trustee or the association shall hold any insurance
proceeds in trust for unit owners and lienholders as their interests may appear. Subject to the provisions
of subsection H of this section, the proceeds shall be disbursed first for the repair or restoration of the
damaged property, and unit owners and lienholders are not entitled to receive payment of any portion of
the proceeds unless there is a surplus of proceeds after the property has been completely repaired or
restored, or the condominium is terminated.
F. An insurance policy issued to the association does not prevent a unit owner from obtaining insurance
for his own benefit.
G. An insurer that has issued an insurance policy under this section shall issue certificates or memoranda
of insurance to the association and, on written request, to any unit owner, mortgagee or beneficiary under
a deed of trust. The insurer issuing the policy shall not cancel or refuse to renew it until thirty days after
notice of the proposed cancellation or nonrenewal has been mailed to the association, each unit owner
and each mortgagee or beneficiary under a deed of trust to whom a certificate or memorandum of
insurance has been issued at their respective last known addresses.
H. Any portion of the condominium for which insurance is required under this section which is damaged or
destroyed shall be repaired or replaced promptly by the association unless any of the following apply:
1. The condominium is terminated.
2. Repair or replacement would be illegal under any state or local health or safety statute or
ordinance.
3. Eighty per cent of the unit owners, including every owner of a unit or allocated limited common
element which will not be rebuilt, vote not to rebuild.
I. The cost of repair or replacement in excess of insurance proceeds and reserves is a common expense.
If the entire condominium is not repaired or replaced:
1. The insurance proceeds attributable to the damaged common elements in proportion to their
common element interests or as otherwise provided in the declaration shall be used to restore the
damaged area to a condition compatible with the remainder of the condominium.
2. The insurance proceeds attributable to units and allocated limited common elements which are
not rebuilt shall be distributed in proportion to their common element interests or as otherwise
provided in the declaration to the owners of those units and the owners of the units to which those
limited common elements were allocated, or to lienholders as their interests may appear.
3. The remainder of the proceeds shall be distributed to all the unit owners or lienholders as their
interests may appear in proportion to the common element interests of all the units.
J. If the unit owners vote not to rebuild any unit, that unit's allocated interests are automatically
reallocated on the vote as if the unit had been condemned under section 33-1206, subsection A, and the
association promptly shall prepare, execute and record an amendment to the declaration reflecting the
reallocations.
K. Notwithstanding the provisions of subsections H, I and J of this section, section 33-1228 governs the
distribution of insurance proceeds if the condominium is terminated.
L. If all units are restricted to nonresidential use, the provisions of a subsection or paragraph of this
section do not apply if the declaration, articles of incorporation or amended bylaws contain provisions
inconsistent with such subsection or paragraph.
M. This section does not prohibit the declaration from requiring additional or greater amounts of insurance
coverage or does not prohibit the board of directors from acquiring additonal or greater amounts of
coverage as it reasonably deems appropriate.
33-1254. Surplus monies
Unless otherwise provided in the declaration, any surplus monies of the association remaining after
payment of or provision for common expenses and any prepayment of reserves shall be paid to the unit
owners in proportion to their common expense liabilities or credited to them to reduce their future
common expense assessments.
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33-1255. Assessments for common expenses; applicability
A. Until the association makes a common expense assessment, the declarant shall pay all common
expenses. After any assessment has been made by the association, assessments shall be made at least
annually, based on a budget adopted at least annually by the association.
B. Except for assessments under subsections C, D, E and F of this section, all common expenses shall
be assessed against all the units in accordance with the allocations set forth in the declaration pursuant to
section 33-1217, subsection A. Any past due common expense assessment or installment bears interest
at the rate established by the board subject to the condominium documents.
C. Unless otherwise provided for in the declaration all of the following apply:
1. Any common expense associated with the maintenance, repair or replacement of a limited
common element shall be equally assessed against the units to which the limited common
element is assigned.
2. Any common expense or portion of a common expense benefitting fewer than all of the units
shall be assessed exclusively against the units benefitted.
D. Assessments to pay a judgment against the association may be made only against the units in the
condominium at the time the judgment was entered, in proportion to their common expense liabilities.
E. If any common expense is caused by the misconduct of any unit owner, the association may assess
that expense exclusively against that unit.
F. If the declaration so provides, the common expense assessment for any unit on which construction has
not been substantially completed may be an amount which is not less than twenty-five per cent of the
common expense assessment for units which have been substantially completed. However, this reduced
common expense assessment shall not be permitted, unless the declarant is obligated under the
declaration to pay to the association any deficiency in monies due to the declarant having paid a reduced
common assessment and necessary for the association to be able to timely pay all common expenses.
G. If common expense liabilities are reallocated, common expense assessments and any installment on
the assessments not yet due shall be recalculated in accordance with the reallocated common expense
liabilities.
H. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this
title.
33-1256. Lien for assessments; priority; mechanics' and materialmen's liens; applicability
A. The association has a lien on a unit for any assessment levied against that unit from the time the
assessment becomes due. The association's lien for assessments, for charges for late payment of those
assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with
respect to those assessments may be foreclosed in the same manner as a mortgage on real estate but
may be foreclosed only if the owner has been delinquent in the payment of monies secured by the lien,
excluding reasonable collection fees, reasonable attorney fees and charges for late payment of and costs
incurred with respect to those assessments, for a period of one year or in the amount of one thousand
two hundred dollars or more, whichever occurs first. Fees, charges, late charges, monetary penalties and
interest charged pursuant to section 33-1242, subsection A, paragraphs 10, 11 and 12, other than
charges for late payment of assessments, are not enforceable as assessments under this section. If an
assessment is payable in installments, the full amount of the assessment is a lien from the time the first
installment of the assessment becomes due. The association has a lien for fees, charges, late charges,
other than charges for late payment of assessments, monetary penalties or interest charged pursuant to
section 33-1242, subsection A, paragraphs 10, 11 and 12 after the entry of a judgment in a civil suit for
those fees, charges, late charges, monetary penalties or interest from a court of competent jurisdiction
and the recording of that judgment in the office of the county recorder as otherwise provided by law. The
association's lien for monies other than for assessments, for charges for late payment of those
assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with
respect to those assessments may not be foreclosed and is effective only on conveyance of any interest
in the real property.
B. A lien for assessments, for charges for late payment of those assessments, for reasonable collection
fees and for reasonable attorney fees and costs incurred with respect to those assessments under this
section is prior to all other liens, interests and encumbrances on a unit except:
1. Liens and encumbrances recorded before the recordation of the declaration.

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2. A recorded first mortgage on the unit, a seller's interest in a first contract for sale pursuant to
chapter 6, article 3 of this title on the unit recorded prior to the lien arising pursuant to subsection
A of this section or a recorded first deed of trust on the unit.
3. Liens for real estate taxes and other governmental assessments or charges against the unit.
C. Subsection B of this section does not affect the priority of mechanics' or materialmen's liens or the
priority of liens for other assessments made by the association. The lien under this section is not subject
to chapter 8 of this title.
D. Unless the declaration otherwise provides, if two or more associations have liens for assessments
created at any time on the same real estate, those liens have equal priority.
E. Recording of the declaration constitutes record notice and perfection of the lien for assessments, for
charges for late payment of those assessments, for reasonable collection fees and for reasonable
attorney fees and costs incurred with respect to those assessments. Further recordation of any claim of
lien for assessments under this section is not required.
F. A lien for unpaid assessments is extinguished unless proceedings to enforce the lien are instituted
within three years after the full amount of the assessments becomes due.
G. This section does not prohibit actions to recover sums for which subsection A of this section creates a
lien or does not prohibit an association from taking a deed in lieu of foreclosure.
H. A judgment or decree in any action brought under this section shall include costs and reasonable
attorney fees for the prevailing party.
I. The association on written request shall furnish to a lienholder, escrow agent, unit owner or person
designated by a unit owner a statement setting forth the amount of unpaid assessments against the unit.
The statement shall be furnished within ten days after receipt of the request and the statement is binding
on the association, the board of directors and every unit owner if the statement is requested by an escrow
agency that is licensed pursuant to title 6, chapter 7. Failure to provide the statement to the escrow agent
within the time provided for in this subsection shall extinguish any lien for any unpaid assessment then
due.
J. Notwithstanding any provision in the condominium documents or in any contract between the
association and a management company, unless the member directs otherwise, all payments received on
a member's account shall be applied first to any unpaid assessments, for unpaid charges for late payment
of those assessments, for reasonable collection fees and for unpaid attorney fees and costs incurred with
respect to those assessments, in that order, with any remaining amounts applied next to other unpaid
fees, charges and monetary penalties or interest and late charges on any of those amounts.
K. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this
title.
33-1257. Other liens affecting the condominium
A. Except as provided in subsection B of this section, a legally recorded judgment for money against the
association is not a lien on the common elements but is a lien in favor of the judgment lienholder against
all of the units in the condominium at the time the judgment was entered. Other property of a unit owner
is not subject to the claims of creditors of the association.
B. If the association has granted a mortgage, deed of trust or security interest in the common elements to
a creditor of the association pursuant to section 33-1252, the holder of that security interest must exercise
its right against the common elements before its judgment lien on any unit may be enforced.
C. Whether perfected before or after the creation of the condominium, if a lien other than a deed of trust
or mortgage becomes effective against two or more units, the unit owner of an affected unit may pay to
the lienholder the amount of the lien attributable to his unit, and the lienholder, on receipt of payment,
shall promptly deliver a release of the lien covering that unit. The amount of the payment shall be
proportionate to the ratio which that unit owner's common expense liability bears to the common expense
liabilities of all unit owners whose units are subject to the lien. After payment, the association shall not
assess or have a lien against that unit owner's unit for any portion of the common expenses incurred in
connection with that lien.
D. A judgment against the association shall be indexed in the name of the condominium and the
association and shall include the legal description of the unit subject to the lien. When so indexed, the
judgment is notice of the lien against the units.

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33-1258. Association financial and other records; applicability
A. Except as provided in subsection B of this section, all financial and other records of the association
shall be made reasonably available for examination by any member or any person designated by the
member in writing as the member's representative. The association shall not charge a member or any
person designated by the member in writing for making material available for review. The association
shall have ten business days to fulfill a request for examination. On request for purchase of copies of
records by any member or any person designated by the member in writing as the member's
representative, the association shall have ten business days to provide copies of the requested records.
An association may charge a fee for making copies of not more than fifteen cents per page.
B. Books and records kept by or on behalf of the association and the board may be withheld from
disclosure to the extent that the portion withheld relates to any of the following:
1. Privileged communication between an attorney for the association and the association.
2. Pending litigation.
3. Meeting minutes or other records of a session of a board meeting that is not required to be
open to all members pursuant to section 33-1248.
4. Personal, health or financial records of an individual member of the association, an individual
employee of the association or an individual employee of a contractor for the association,
including records of the association directly related to the personal, health or financial information
about an individual member of the association, an individual employee of the association or an
individual employee of a contractor for the association.
5. Records relating to the job performance of, compensation of, health records of or specific
complaints against an individual employee of the association or an individual employee of a
contractor of the association who works under the direction of the association.
C. The association shall not be required to disclose financial and other records of the association if
disclosure would violate any state or federal law.
D. This section does not apply to an association for a timeshare plan that is subject to chapter 20 of this
title.
33-1259. Association as trustee
With respect to a third person dealing with the association in the association's capacity as a trustee, the
existence of trust powers and their proper exercise by the association may be assumed without inquiry. A
third person is not bound to inquire whether the association has power to act as trustee or is properly
exercising trust powers. A third person, without actual knowledge that the association is exceeding or
improperly exercising its powers, is fully protected in dealing with the association as if it possessed and
properly exercised the powers it purports to exercise. A third person is not bound to assure the proper
application of trust assets paid or delivered to the association in its capacity as trustee.
33-1260. Resale of units; information required; fees; civil penalty; applicability; definition
(Amended by Laws 2014, Ch. 94)
A. For condominiums with fewer than fifty units, a unit owner shall mail or deliver to a purchaser or a
purchaser's authorized agent within ten days after receipt of a written notice of a pending sale of the unit,
and for condominiums with fifty or more units, the association shall mail or deliver to a purchaser or a
purchaser's authorized agent within ten days after receipt of a written notice of a pending sale that
contains the name and address of the purchaser all of the following in either paper or electronic format:
1. A copy of the bylaws and the rules of the association.
2. A copy of the declaration.
3. A dated statement containing:
(a) The telephone number and address of a principal contact for the association, which
may be an association manager, an association management company, an officer of the
association or any other person designated by the board of directors.
(b) The amount of the common expense assessment for the unit and any unpaid
common expense assessment, special assessment or other assessment, fee or charge
currently due and payable from the selling unit owner. If the request is made by a
lienholder, escrow agent, unit owner or person designated by a unit owner pursuant to
section 33-1256, failure to provide the information pursuant to this subdivision within the

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time provided for in this subsection shall extinguish any lien for any unpaid assessment
then due against that unit.
(c) A statement as to whether a portion of the unit is covered by insurance maintained by
the association.
(d) The total amount of money held by the association as reserves.
(e) If the statement is being furnished by the association, a statement as to whether the
records of the association reflect any alterations or improvements to the unit that violate
the declaration. The association is not obligated to provide information regarding
alterations or improvements that occurred more than six years before the proposed sale.
Nothing in this subdivision relieves the seller of a unit from the obligation to disclose
alterations or improvements to the unit that violate the declaration, nor precludes the
association from taking action against the purchaser of a unit for violations that are
apparent at the time of purchase and that are not reflected in the association's records.
(f) If the statement is being furnished by the unit owner, a statement as to whether the
unit owner has any knowledge of any alterations or improvements to the unit that violate
the declaration.
(g) A statement of case names and case numbers for pending litigation with respect to
the unit filed by the association against the unit owner or filed by the unit owner against
the association. The unit owner or the association shall not be required to disclose
information concerning the pending litigation that would violate any applicable rule of
attorney-client privilege under Arizona law.
(h) A statement that provides "I hereby acknowledge that the declaration, bylaws and
rules of the association constitute a contract between the association and me (the
purchaser). By signing this statement, I acknowledge that I have read and understand the
association's contract with me (the purchaser). I also understand that as a matter of
Arizona law, if I fail to pay my association assessments, the association may foreclose on
my property." The statement shall also include a signature line for the purchaser and
shall be returned to the association within fourteen calendar days.
4. A copy of the current operating budget of the association.
5. A copy of the most recent annual financial report of the association. If the report is more than
ten pages, the association may provide a summary of the report in lieu of the entire report.
6. A copy of the most recent reserve study of the association, if any.
7. A statement summarizing any pending lawsuits, except those relating to the collection of
assessments owed by unit owners other than the selling unit owner, in which the association is a
named party, including the amount of any money claimed.
B. A purchaser or seller who is damaged by the failure of the unit owner or the association to disclose the
information required by subsection A of this section may pursue all remedies at law or in equity against
the unit owner or the association, whichever failed to comply with subsection A of this section, including
the recovery of reasonable attorney fees.
C. The association may charge the unit owner a fee of not more than an aggregate of four hundred
dollars to compensate the association for the costs incurred in the preparation and delivery of a statement
or other documents furnished by the association pursuant to this section for purposes of resale
disclosure, lien estoppel and any other services related to the transfer or use of the property. In addition,
the association may charge a rush fee of not more than one hundred dollars if the rush services are
required to be performed within seventy-two hours after the request for rush services, and may charge a
statement or other documents update fee of not more than fifty dollars if thirty days or more have passed
since the date of the original disclosure statement or the date the documents were delivered. The
association shall make available to any interested party the amount of any fee established from time to
time by the association. If the aggregate fee for purposes of resale disclosure, lien estoppel and any
other services related to the transfer or use of a property is less than four hundred dollars on January 1,
2010, the fee may increase at a rate of not more than twenty percent per year based on the immediately
preceding fiscal year's amount not to exceed the four hundred dollar aggregate fee. The association may
charge the same fee without regard to whether the association is furnishing the statement or other
documents in paper or electronic format.
D. The fees prescribed by this section shall be collected no earlier than at the close of escrow and may
only be charged once to a unit owner for that transaction between the parties specified in the notice
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required pursuant to subsection A of this section. An association shall not charge or collect a fee relating
to services for resale disclosure, lien estoppel and any other services related to the transfer or use of a
property except as specifically authorized in this section. An association that charges or collects a fee in
violation of this section is subject to a civil penalty of not more than one thousand two hundred dollars.
E. This section applies to a managing agent for an association that is acting on behalf of the association.
F. The following are exempt from this section:
1. A sale in which a public report is issued pursuant to section 32-2183 or 32-2197.02.
2. A sale pursuant to section 32-2181.02.
3. A conveyance by recorded deed that bears an exemption listed in section 11-1134, subsection
B, paragraph 3 or 7. On recordation of the deed and for no additional charge, the unit owner shall
provide the association with the changes in ownership including the unit owner's name, billing
address and phone number. Failure to provide the information shall not prevent the unit owner
from qualifying for the exemption pursuant to this section.
G. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this
title.
H. For the purposes of this section, unless the context otherwise requires, "unit owner" means the seller
of the condominium unit title and excludes any real estate salesperson or real estate broker who is
licensed under title 32, chapter 20 and who is acting as a salesperson or broker, any escrow agent who is
licensed under title 6, chapter 7 and who is acting as an escrow agent and also excludes a trustee of a
deed of trust who is selling the property in a trustee's sale pursuant to chapter 6.1 of this title.
33-1260.01. Rental property; unit owner and agent information; fee; disclosure
(Added by Laws 2014, Ch. 83)
A. A unit owner may use the unit owner's unit as a rental property unless prohibited in the declaration and
shall use it in accordance with the declaration's rental time period restrictions.
B. A unit owner may designate in writing a third party to act as the unit owner's agent with respect to all
association matters relating to the rental unit, except for voting in association elections and serving on the
board of directors. The unit owner shall sign the written designation and shall provide a copy of the
written designation to the association. On delivery of the written designation, the association is authorized
to conduct all association business relating to the unit owner's rental unit through the designated agent.
Any notice given by the association to a unit owner's designated agent on any matter relating to the unit
owner's rental unit constitutes notice to the unit owner.
C. Notwithstanding any provision in the condominium documents, on rental of a unit an association shall
not require a unit owner or a unit owner's agent to disclose any information regarding a tenant other than
the name and contact information for any adults occupying the unit, the time period of the lease, including
the beginning and ending dates of the tenancy, and a description and the license plate numbers of the
tenants' vehicles. If the condominium is an age restricted condominium, the unit owner, the unit owner's
agent or the tenant shall show a government issued identification that bears a photograph and that
confirms that the tenant meets the condominium's age restrictions or requirements.
D. On request of an association or its managing agent for the disclosures prescribed in subsection C of
this section, the managing agent or, if there is no managing agent, the association may charge a fee of
not more than twenty-five dollars, which shall be paid within fifteen days after the postmarked request.
The fee may be charged for each new tenancy for that unit but may not be charged for a renewal of a
lease. Except for the fee permitted by this subsection and fees related to the use of recreational facilities,
the association or its managing agent shall not assess, levy or charge a fee or fine or otherwise impose a
requirement on a unit owner's rental unit any differently than on an owner-occupied unit in the
association.
E. Notwithstanding any provision in the condominium documents, the association is prohibited from doing
any of the following:
1. Requiring a unit owner to provide the association with a copy of the tenant's rental application,
credit report, lease agreement or rental contract or other personal information except as
prescribed by this section. This paragraph does not prohibit the association from acquiring a
credit report on a person in an attempt to collect a debt.
2. Requiring the tenant to sign a waiver or other document limiting the tenant's due process rights
as a condition of the tenant's occupancy of the rental unit.

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3. Prohibiting or otherwise restricting a unit owner from serving on the board of directors based on
the owner's not being an occupant of the unit.
4. Imposing on a unit owner or managing agent any fee, assessment, penalty or other charge in
an amount greater than fifteen dollars for incomplete or late information regarding the information
requested pursuant to subsection C of this section
F. Any attempt by an association to exceed the fee, assessment, penalty or other charge authorized by
subsection D or E of this section voids the fee, assessment, penalty or other charge authorized by
subsection D or E of this section. This section does not prevent an association from complying with the
housing for older persons act of 1995 (P.L. 104–76; 109 Stat. 787).
G. An owner may use a crime free addendum as part of a lease agreement. This section does not
prohibit the owner's use of a crime free addendum.
H. This section does not prohibit and an association may lawfully enforce a provision in the condominium
documents that restricts the residency of persons who are required to be registered pursuant to section
13-3821 and who are classified as level two or level three offenders.
I. An owner of rental property shall abate criminal activity as authorized in section 12-991.
33-1261. Flag display; for sale, rent or lease signs; political signs and activities; applicability
(Amended by Laws 2014, Ch. 83)
A. Notwithstanding any provision in the condominium documents, an association shall not prohibit the
outdoor display of any of the following:
1. The American flag or an official or replica of a flag of the United States army, navy, air force,
marine corps or coast guard by a unit owner on that unit owner's property if the American flag or
military flag is displayed in a manner consistent with the federal flag code (P.L. 94-344; 90 Stat.
810; 4 United States Code sections 4 through 10).
2. The POW/MIA flag.
3. The Arizona state flag.
4. An Arizona Indian nations flag.
5. The Gadsden flag.
B. The association shall adopt reasonable rules and regulations regarding the placement and manner of
display of the American flag, the military flag, the POW/MIA flag, the Arizona state flag or an Arizona
Indian nations flag. The association rules may regulate the location and size of flagpoles but shall not
prohibit the installation of a flagpole.
C. Notwithstanding any provision in the condominium documents, an association shall not prohibit or
charge a fee for the use of, the placement of or the indoor or outdoor display of a for sale, for rent or for
lease sign and a sign rider by a unit owner on that owner's property in any combination, including a sign
that indicates the unit owner is offering the property for sale by owner. The size of a sign offering a
property for sale, for rent or for lease shall be in conformance with the industry standard size sign, which
shall not exceed eighteen by twenty-four inches, and the industry standard size sign rider, which shall not
exceed six by twenty-four inches. This subsection applies only to a commercially produced sign and an
association may prohibit the use of signs that are not commercially produced. With respect to real estate
for sale, for rent or for lease in the condominium, an association shall not prohibit in any way other than
as is specifically authorized by this section or otherwise regulate any of the following:
1. Temporary open house signs or a unit owner's for sale sign. The association shall not require
the use of particular signs indicating an open house or real property for sale and may not further
regulate the use of temporary open house or for sale signs that are industry standard size and
that are owned or used by the seller or the seller's agent.
2. Open house hours. The association may not limit the hours for an open house for real estate
that is for sale in the condominium, except that the association may prohibit an open house being
held before 8:00 a.m. or after 6:00 p.m. and may prohibit open house signs on the common
elements of the condominium.
3. An owner's or an owner's agent's for rent or for lease sign unless an association's documents
prohibit or restrict leasing of a unit or units. An association shall not further regulate a for rent or
for lease sign or require the use of a particular for rent or for lease sign other than the for rent or
for lease sign shall not be any larger than the industry standard size sign of eighteen by twentyfour inches and on or in the unit owner's property. If rental or leasing of a unit is allowed, the

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association may prohibit an open house for rental or leasing being held before 8:00 a.m. or after
6:00 p.m.
D. Notwithstanding any provision in the condominium documents, an association shall not prohibit door to
door political activity, including solicitations of support or opposition regarding candidates or ballot issues,
and shall not prohibit the circulation of political petitions, including candidate nomination petitions or
petitions in support of or opposition to an initiative, referendum or recall or other political issue on property
normally open to visitors within the association, except that an association may do the following:
1. Restrict or prohibit door to door political activity regarding candidates or ballot issues from
sunset to sunrise.
2. Require the prominent display of an identification tag for each person engaged in the activity,
along with the prominent identification of the candidate or ballot issue that is the subject of the
support or opposition.
E. Notwithstanding any provision in the condominium documents, an association shall not prohibit the
indoor or outdoor display of a political sign by a unit owner by placement of a sign on that unit owner's
property, including any limited common elements for that unit that are doors, walls, patios or other limited
common elements that touch the unit, other than the roof. An association may prohibit the display of
political signs earlier than seventy-one days before the day of an election and later than three days after
an election day. An association may regulate the size and number of political signs that may be placed in
the common element ground, on a unit owner's property or on a limited common element for that unit if
the association's regulation is no more restrictive than any applicable city, town or county ordinance that
regulates the size and number of political signs on residential property. If the city, town or county in which
the property is located does not regulate the size and number of political signs on residential property, the
association shall not limit the number of political signs, except that the maximum aggregate total
dimensions of all political signs on a unit owner's property shall not exceed nine square feet. An
association shall not make any regulations regarding the number of candidates supported, the number of
public officers supported or opposed in a recall or the number of propositions supported or opposed on a
political sign. For the purposes of this subsection, "political sign" means a sign that attempts to influence
the outcome of an election, including supporting or opposing the recall of a public officer or supporting or
opposing the circulation of a petition for a ballot measure, question or proposition or the recall of a public
officer.
F. An association shall not require political signs to be commercially produced or professionally
manufactured or prohibit the utilization of both sides of a political sign.
G. A condominium is not required to comply with subsection D of this section if the condominium restricts
vehicular or pedestrian access to the condominium. Nothing in this section requires a condominium to
make its common elements other than roadways and sidewalks that are normally open to visitors
available for the circulation of political petitions to anyone who is not an owner or resident of the
community.
H. An association or managing agent that violates subsection C of this section forfeits and extinguishes
the lien rights authorized under section 33-1256 against that unit for a period of six consecutive months
from the date of the violation.
I. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this title.

Article 4 Administration of the Condominium Act
33-1270. Department of real estate; enforcement
A. Nothing in this chapter shall be construed to increase or decrease or otherwise affect any rights or
powers granted to the commissioner of the department of real estate under title 32, chapter 20 with
respect to the issuance of public reports.
B. The commissioner of the department of real estate shall require compliance with section 33-1215 and
section 33-1219 in connection with the administration of the subdivision laws of this state under title 32,
chapter 20, article 4. The commissioner shall not be required to administer or enforce any other
provisions of this chapter.

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Title 33, Chapter 16 PLANNED COMMUNITIES
Article 1 General Provisions
33-1801. Applicability; exemption
A. This chapter applies to all planned communities.
B. Notwithstanding any provisions in the community documents, this chapter does not apply to any school
that receives monies from this state, including a charter school, and a school is exempt from regulation or
any enforcement action by any homeowners' association that is subject to this chapter. With the
exception of homeschools as defined in section 15-802, schools shall not be established within the living
units of a homeowners' association. The homeowners' association may enter into a contractual
agreement with a school district or charter school to allow use of the homeowners' association's common
areas by the school district or charter school.
C. This chapter does not apply to timeshare plans or associations that are subject to chapter 20 of this
title.
33-1802. Definitions
In this chapter and in the community documents, unless the context otherwise requires:
1. "Association" means a nonprofit corporation or unincorporated association of owners that is
created pursuant to a declaration to own and operate portions of a planned community and that
has the power under the declaration to assess association members to pay the costs and
expenses incurred in the performance of the association's obligations under the declaration.
2. "Community documents" means the declaration, bylaws, articles of incorporation, if any, and
rules, if any.
3. "Declaration" means any instruments, however denominated, that establish a planned
community and any amendment to those instruments.
4. "Planned community" means a real estate development that includes real estate owned and
operated by or real estate on which an easement to maintain roadways or a covenant to maintain
roadways is held by a nonprofit corporation or unincorporated association of owners, that is
created for the purpose of managing, maintaining or improving the property and in which the
owners of separately owned lots, parcels or units are mandatory members and are required to
pay assessments to the association for these purposes. Planned community does not include a
timeshare plan or a timeshare association that is governed by chapter 20 of this title or a
condominium that is governed by chapter 9 of this title.
33-1803. Assessment limitations; penalties; notice to member of violation
A. Unless limitations in the community documents would result in a lower limit for the assessment, the
association shall not impose a regular assessment that is more than twenty percent greater than the
immediately preceding fiscal year's assessment without the approval of the majority of the members of
the association. Unless reserved to the members of the association, the board of directors may impose
reasonable charges for the late payment of assessments. A payment by a member is deemed late if it is
unpaid fifteen or more days after its due date, unless the community documents provide for a longer
period. Charges for the late payment of assessments are limited to the greater of fifteen dollars or ten
percent of the amount of the unpaid assessment and may be imposed only after the association has
provided notice that the assessment is overdue or provided notice that the assessment is considered
overdue after a certain date. Any monies paid by the member for an unpaid assessment shall be applied
first to the principal amount unpaid and then to the interest accrued.
B. After notice and an opportunity to be heard, the board of directors may impose reasonable monetary
penalties on members for violations of the declaration, bylaws and rules of the association.
Notwithstanding any provision in the community documents, the board of directors shall not impose a
charge for a late payment of a penalty that exceeds the greater of fifteen dollars or ten percent of the
amount of the unpaid penalty. A payment is deemed late if it is unpaid fifteen or more days after its due
date, unless the declaration, bylaws or rules of the association provide for a longer period. Any monies
paid by a member for an unpaid penalty shall be applied first to the principal amount unpaid and then to

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the interest accrued. Notice pursuant to this subsection shall include information pertaining to the manner
in which the penalty shall be enforced.
C. A member who receives a written notice that the condition of the property owned by the member is in
violation of the community documents without regard to whether a monetary penalty is imposed by the
notice may provide the association with a written response by sending the response by certified mail
within twenty-one calendar days after the date of the notice. The response shall be sent to the address
identified in the notice.
D. Within ten business days after receipt of the certified mail containing the response from the member,
the association shall respond to the member with a written explanation regarding the notice that shall
provide at least the following information unless previously provided in the notice of violation:
1. The provision of the community documents that has allegedly been violated.
2. The date of the violation or the date the violation was observed.
3. The first and last name of the person or persons who observed the violation.
4. The process the member must follow to contest the notice.
E. Unless the information required in subsection D, paragraph 4 of this section is provided in the notice of
violation, the association shall not proceed with any action to enforce the community documents,
including the collection of attorney fees, before or during the time prescribed by subsection D of this
section regarding the exchange of information between the association and the member and shall give
the member written notice of the member's option to petition for an administrative hearing on the matter in
the state real estate department pursuant to section 32-2199.01. At any time before or after completion of
the exchange of information pursuant to this section, the member may petition for a hearing pursuant to
section 32-2199.01 if the dispute is within the jurisdiction of the state real estate department as prescribed
in section 32-2199.01.
33-1804. Open meetings; exceptions
A. Notwithstanding any provision in the declaration, bylaws or other documents to the contrary, all
meetings of the members' association and the board of directors, and any regularly scheduled committee
meetings, are open to all members of the association or any person designated by a member in writing as
the member's representative and all members or designated representatives so desiring shall be
permitted to attend and speak at an appropriate time during the deliberations and proceedings. The board
may place reasonable time restrictions on those persons speaking during the meeting but shall permit a
member or member's designated representative to speak once after the board has discussed a specific
agenda item but before the board takes formal action on that item in addition to any other opportunities to
speak. The board shall provide for a reasonable number of persons to speak on each side of an issue.
Persons attending may audiotape or videotape those portions of the meetings of the board of directors
and meetings of the members that are open. The board of directors of the association shall not require
advance notice of the audiotaping or videotaping and may adopt reasonable rules governing the
audiotaping and videotaping of open portions of the meetings of the board and the membership, but such
rules shall not preclude such audiotaping or videotaping by those attending, unless the board audiotapes
or videotapes the meeting and makes the unedited audiotapes or videotapes available to members on
request without restrictions on its use as evidence in any dispute resolution process. Any portion of a
meeting may be closed only if that closed portion of the meeting is limited to consideration of one or more
of the following:
1. Legal advice from an attorney for the board or the association. On final resolution of any
matter for which the board received legal advice or that concerned pending or contemplated
litigation, the board may disclose information about that matter in an open meeting except for
matters that are required to remain confidential by the terms of a settlement agreement or
judgment.
2. Pending or contemplated litigation.
3. Personal, health or financial information about an individual member of the association, an
individual employee of the association or an individual employee of a contractor for the
association, including records of the association directly related to the personal, health or
financial information about an individual member of the association, an individual employee of the
association or an individual employee of a contractor for the association.

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4. Matters relating to the job performance of, compensation of, health records of or specific
complaints against an individual employee of the association or an individual employee of a
contractor of the association who works under the direction of the association.
5. Discussion of a member's appeal of any violation cited or penalty imposed by the association
except on request of the affected member that the meeting be held in an open session.
B. Notwithstanding any provision in the community documents, all meetings of the members' association
and the board shall be held in this state. A meeting of the members' association shall be held at least
once each year. Special meetings of the members' association may be called by the president, by a
majority of the board of directors or by members having at least twenty-five percent, or any lower
percentage specified in the bylaws, of the votes in the association. Not fewer than ten nor more than fifty
days in advance of any meeting of the members the secretary shall cause notice to be hand-delivered or
sent prepaid by United States mail to the mailing address for each lot, parcel or unit owner or to any other
mailing address designated in writing by a member. The notice shall state the date, time and place of the
meeting. A notice of any annual, regular or special meeting of the members shall also state the purpose
for which the meeting is called, including the general nature of any proposed amendment to the
declaration or bylaws, changes in assessments that require approval of the members and any proposal to
remove a director or an officer. The failure of any member to receive actual notice of a meeting of the
members does not affect the validity of any action taken at that meeting.
C. Before entering into any closed portion of a meeting of the board of directors, or on notice of a meeting
under subsection D of this section that will be closed, the board shall identify the paragraph under
subsection A of this section that authorizes the board to close the meeting.
D. Notwithstanding any provision in the declaration, bylaws or other community documents, for meetings
of the board of directors that are held after the termination of declarant control of the association, notice to
members of meetings of the board of directors shall be given at least forty-eight hours in advance of the
meeting by newsletter, conspicuous posting or any other reasonable means as determined by the board
of directors. An affidavit of notice by an officer of the corporation is prima facie evidence that notice was
given as prescribed by this section. Notice to members of meetings of the board of directors is not
required if emergency circumstances require action by the board before notice can be given. Any notice
of a board meeting shall state the date, time and place of the meeting. The failure of any member to
receive actual notice of a meeting of the board of directors does not affect the validity of any action taken
at that meeting.
E. Notwithstanding any provision in the declaration, bylaws or other community documents, for meetings
of the board of directors that are held after the termination of declarant control of the association, all of the
following apply:
1. The agenda shall be available to all members attending.
2. An emergency meeting of the board of directors may be called to discuss business or take
action that cannot be delayed for the forty-eight hours required for notice. At any emergency
meeting called by the board of directors, the board of directors may act only on emergency
matters. The minutes of the emergency meeting shall state the reason necessitating the
emergency meeting. The minutes of the emergency meeting shall be read and approved at the
next regularly scheduled meeting of the board of directors.
3. A quorum of the board of directors may meet by means of a telephone conference if a
speakerphone is available in the meeting room that allows board members and association
members to hear all parties who are speaking during the meeting.
4. Any quorum of the board of directors that meets informally to discuss association business,
including workshops, shall comply with the open meeting and notice provisions of this section
without regard to whether the board votes or takes any action on any matter at that informal
meeting.
F. It is the policy of this state as reflected in this section that all meetings of a planned community,
whether meetings of the members' association or meetings of the board of directors of the association, be
conducted openly and that notices and agendas be provided for those meetings that contain the
information that is reasonably necessary to inform the members of the matters to be discussed or decided
and to ensure that members have the ability to speak after discussion of agenda items, but before a vote
of the board of directors or members is taken. Toward this end, any person or entity that is charged with
the interpretation of these provisions, including members of the board of directors and any community

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manager, shall take into account this declaration of policy and shall construe any provision of this section
in favor of open meetings.
33-1805. Association financial and other records
A. Except as provided in subsection B of this section, all financial and other records of the association
shall be made reasonably available for examination by any member or any person designated by the
member in writing as the member's representative. The association shall not charge a member or any
person designated by the member in writing for making material available for review. The association
shall have ten business days to fulfill a request for examination. On request for purchase of copies of
records by any member or any person designated by the member in writing as the member's
representative, the association shall have ten business days to provide copies of the requested records.
An association may charge a fee for making copies of not more than fifteen cents per page.
B. Books and records kept by or on behalf of the association and the board may be withheld from
disclosure to the extent that the portion withheld relates to any of the following:
1. Privileged communication between an attorney for the association and the association.
2. Pending litigation.
3. Meeting minutes or other records of a session of a board meeting that is not required to be
open to all members pursuant to section 33-1804.
4. Personal, health or financial records of an individual member of the association, an individual
employee of the association or an individual employee of a contractor for the association,
including records of the association directly related to the personal, health or financial information
about an individual member of the association, an individual employee of the association or an
individual employee of a contractor for the association.
5. Records relating to the job performance of, compensation of, health records of or specific
complaints against an individual employee of the association or an individual employee of a
contractor of the association who works under the direction of the association.
C. The association shall not be required to disclose financial and other records of the association if
disclosure would violate any state or federal law.
33-1806. Resale of units; information required; fees; civil penalty; definition
A. For planned communities with fewer than fifty units, a member shall mail or deliver to a purchaser or a
purchaser's authorized agent within ten days after receipt of a written notice of a pending sale of the unit,
and for planned communities with fifty or more units, the association shall mail or deliver to a purchaser or
a purchaser's authorized agent within ten days after receipt of a written notice of a pending sale that
contains the name and address of the purchaser all of the following in either paper or electronic format:
1. A copy of the bylaws and the rules of the association.
2. A copy of the declaration.
3. A dated statement containing:
(a) The telephone number and address of a principal contact for the association, which
may be an association manager, an association management company, an officer of the
association or any other person designated by the board of directors.
(b) The amount of the common regular assessment and the unpaid common regular
assessment, special assessment or other assessment, fee or charge currently due and
payable from the selling member. If the request is made by a lienholder, escrow agent,
member or person designated by a member pursuant to section 33-1807, failure to
provide the information pursuant to this subdivision within the time provided for in this
subsection shall extinguish any lien for any unpaid assessment then due against that
property.
(c) A statement as to whether a portion of the unit is covered by insurance maintained by
the association.
(d) The total amount of money held by the association as reserves.
(e) If the statement is being furnished by the association, a statement as to whether the
records of the association reflect any alterations or improvements to the unit that violate
the declaration. The association is not obligated to provide information regarding
alterations or improvements that occurred more than six years before the proposed sale.
Nothing in this subdivision relieves the seller of a unit from the obligation to disclose
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alterations or improvements to the unit that violate the declaration, nor precludes the
association from taking action against the purchaser of a unit for violations that are
apparent at the time of purchase and that are not reflected in the association's records.
(f) If the statement is being furnished by the member, a statement as to whether the
member has any knowledge of any alterations or improvements to the unit that violate the
declaration.
(g) A statement of case names and case numbers for pending litigation with respect to
the unit filed by the association against the member or filed by the member against the
association. The member shall not be required to disclose information concerning such
pending litigation that would violate any applicable rule of attorney-client privilege under
Arizona law.
(h) A statement that provides "I hereby acknowledge that the declaration, bylaws and
rules of the association constitute a contract between the association and me (the
purchaser). By signing this statement, I acknowledge that I have read and understand the
association's contract with me (the purchaser). I also understand that as a matter of
Arizona law, if I fail to pay my association assessments, the association may foreclose on
my property." The statement shall also include a signature line for the purchaser and
shall be returned to the association within fourteen calendar days.
4. A copy of the current operating budget of the association.
5. A copy of the most recent annual financial report of the association. If the report is more than
ten pages, the association may provide a summary of the report in lieu of the entire report.
6. A copy of the most recent reserve study of the association, if any.
7. A statement summarizing any pending lawsuits, except those relating to the collection of
assessments owed by members other than the selling member, in which the association is a
named party, including the amount of any money claimed.
B. A purchaser or seller who is damaged by the failure of the member or the association to disclose the
information required by subsection A of this section may pursue all remedies at law or in equity against
the member or the association, whichever failed to comply with subsection A of this section, including the
recovery of reasonable attorney fees.
C. The association may charge the member a fee of not more than an aggregate of four hundred dollars
to compensate the association for the costs incurred in the preparation and delivery of a statement or
other documents furnished by the association pursuant to this section for purposes of resale disclosure,
lien estoppel and any other services related to the transfer or use of the property. In addition, the
association may charge a rush fee of not more than one hundred dollars if the rush services are required
to be performed within seventy-two hours after the request for rush services, and may charge a statement
or other documents update fee of not more than fifty dollars if thirty days or more have passed since the
date of the original disclosure statement or the date the documents were delivered. The association shall
make available to any interested party the amount of any fee established from time to time by the
association. If the aggregate fee for purposes of resale disclosure, lien estoppel and any other services
related to the transfer or use of a property is less than four hundred dollars on January 1, 2010, the fee
may increase at a rate of not more than twenty percent per year based on the immediately preceding
fiscal year's amount not to exceed the four hundred dollar aggregate fee. The association may charge the
same fee without regard to whether the association is furnishing the statement or other documents in
paper or electronic format.
D. The fees prescribed by this section shall be collected no earlier than at the close of escrow and may
only be charged once to a member for that transaction between the parties specified in the notice
required pursuant to subsection A of this section. An association shall not charge or collect a fee relating
to services for resale disclosure, lien estoppel and any other services related to the transfer or use of a
property except as specifically authorized in this section. An association that charges or collects a fee in
violation of this section is subject to a civil penalty of not more than one thousand two hundred dollars.
E. This section applies to a managing agent for an association that is acting on behalf of the association.
F. The following are exempt from this section:
1. A sale in which a public report is issued pursuant to section 32-2183 or 32-2197.02.
2. A sale pursuant to section 32-2181.02.
3. A conveyance by recorded deed that bears an exemption listed in section 11-1134, subsection
B, paragraph 3 or 7. On recordation of the deed and for no additional charge, the member shall
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provide the association with the changes in ownership including the member's name, billing
address and phone number. Failure to provide the information shall not prevent the member from
qualifying for the exemption pursuant to this section.
G. For the purposes of this section, unless the context otherwise requires, "member" means the seller of
the unit title and excludes any real estate salesperson or real estate broker who is licensed under title 32,
chapter 20 and who is acting as a salesperson or broker, any escrow agent who is licensed under title 6,
chapter 7 and who is acting as an escrow agent and also excludes a trustee of a deed of trust who is
selling the property in a trustee's sale pursuant to chapter 6.1 of this title.
33-1806.01. Rental property; member and agent information; fee; disclosure
A. A member may use the member's property as a rental property unless prohibited in the declaration and
shall use it in accordance with the declaration's rental time period restrictions.
B. A member may designate in writing a third party to act as the member's agent with respect to all
association matters relating to the rental property, except for voting in association elections and serving
on the board of directors. The member shall sign the written designation and shall provide a copy of the
written designation to the association. On delivery of the written designation, the association is authorized
to conduct all association business relating to the member's rental property through the designated agent.
Any notice given by the association to a member's designated agent on any matter relating to the
member's rental property constitutes notice to the member.
C. Notwithstanding any provision in the community documents, on rental of a member's property an
association shall not require a member or a member's agent to disclose any information regarding a
tenant other than the name and contact information for any adults occupying the property, the time period
of the lease, including the beginning and ending dates of the tenancy, and a description and the license
plate numbers of the tenants' vehicles. If the planned community is an age restricted community, the
member, the member's agent or the tenant shall show a government issued identification that bears a
photograph and that confirms that the tenant meets the community's age restrictions or requirements.
D. On request of an association or its managing agent for the disclosures prescribed in subsection C of
this section, the managing agent or, if there is no managing agent, the association may charge a fee of
not more than twenty-five dollars, which shall be paid within fifteen days after the postmarked request.
The fee may be charged for each new tenancy for that property but may not be charged for a renewal of a
lease. Except for the fee permitted by this subsection and fees related to the use of recreational facilities,
the association or its managing agent shall not assess, levy or charge a fee or fine or otherwise impose a
requirement on a member's rental property any differently than on an owner-occupied property in the
association.
E. Notwithstanding any provision in the community documents, the association is prohibited from doing
any of the following:
1. Requiring a member to provide the association with a copy of the tenant's rental application,
credit report, lease agreement or rental contract or other personal information except as
prescribed by this section. This paragraph does not prohibit the association from acquiring a
credit report on a person in an attempt to collect a debt.
2. Requiring the tenant to sign a waiver or other document limiting the tenant's due process rights
as a condition of the tenant's occupancy of the rental property.
3. Prohibiting or otherwise restricting a member from serving on the board of directors based on
the member's not being an occupant of the property.
4. Imposing on a member or managing agent any fee, assessment, penalty or other charge in an
amount greater than fifteen dollars for incomplete or late information regarding the information
requested pursuant to subsection C of this section.
F. Any attempt by an association to exceed the fee, assessment, penalty or other charge authorized by
subsection D or E of this section voids the fee, assessment, penalty or other charge authorized by
subsection D or E of this section. This section does not prevent an association from complying with the
housing for older persons act of 1995 (P.L. 104–76; 109 Stat. 787).
G. An owner may use a crime free addendum as part of a lease agreement. This section does not
prohibit the owner's use of a crime free addendum.
H. This section does not prohibit and an association may lawfully enforce a provision in the community
documents that restricts the residency of persons who are required to be registered pursuant to section
13-3821 and who are classified as level two or level three offenders.
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I. An owner of rental property shall abate criminal activity as authorized in section 12-991.
33-1807. Lien for assessments; priority; mechanics’ and materialmen’s liens
A. The association has a lien on a unit for any assessment levied against that unit from the time the
assessment becomes due. The association's lien for assessments, for charges for late payment of those
assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with
respect to those assessments may be foreclosed in the same manner as a mortgage on real estate but
may be foreclosed only if the owner has been delinquent in the payment of monies secured by the lien,
excluding reasonable collection fees, reasonable attorney fees and charges for late payment of and costs
incurred with respect to those assessments, for a period of one year or in the amount of one thousand
two hundred dollars or more, whichever occurs first. Fees, charges, late charges, monetary penalties and
interest charged pursuant to section 33-1803, other than charges for late payment of assessments are
not enforceable as assessments under this section. If an assessment is payable in installments, the full
amount of the assessment is a lien from the time the first installment of the assessment becomes due.
The association has a lien for fees, charges, late charges, other than charges for late payment of
assessments, monetary penalties or interest charged pursuant to section 33-1803 after the entry of a
judgment in a civil suit for those fees, charges, late charges, monetary penalties or interest from a court of
competent jurisdiction and the recording of that judgment in the office of the county recorder as otherwise
provided by law. The association's lien for monies other than for assessments, for charges for late
payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs
incurred with respect to those assessments may not be foreclosed and is effective only on conveyance of
any interest in the real property.
B. A lien for assessments, for charges for late payment of those assessments, for reasonable collection
fees and for reasonable attorney fees and costs incurred with respect to those assessments under this
section is prior to all other liens, interests and encumbrances on a unit except:
1. Liens and encumbrances recorded before the recordation of the declaration.
2. A recorded first mortgage on the unit, a seller's interest in a first contract for sale pursuant to
chapter 6, article 3 of this title on the unit recorded prior to the lien arising pursuant to subsection
A of this section or a recorded first deed of trust on the unit.
3. Liens for real estate taxes and other governmental assessments or charges against the unit.
C. Subsection B of this section does not affect the priority of mechanics' or materialmen's liens or the
priority of liens for other assessments made by the association. The lien under this section is not subject
to chapter 8 of this title.
D. Unless the declaration otherwise provides, if two or more associations have liens for assessments
created at any time on the same real estate those liens have equal priority.
E. Recording of the declaration constitutes record notice and perfection of the lien for assessments, for
charges for late payment of assessments, for reasonable collection fees and for reasonable attorney fees
and costs incurred with respect to those assessments. Further recordation of any claim of lien for
assessments under this section is not required.
F. A lien for an unpaid assessment is extinguished unless proceedings to enforce the lien are instituted
within three years after the full amount of the assessment becomes due.
G. This section does not prohibit:
1. Actions to recover amounts for which subsection A of this section creates a lien.
2. An association from taking a deed in lieu of foreclosure.
H. A judgment or decree in any action brought under this section shall include costs and reasonable
attorney fees for the prevailing party.
I. On written request, the association shall furnish to a lienholder, escrow agent, unit owner or person
designated by a unit owner a statement setting forth the amount of any unpaid assessment against the
unit. The association shall furnish the statement within ten days after receipt of the request, and the
statement is binding on the association, the board of directors and every unit owner if the statement is
requested by an escrow agency that is licensed pursuant to title 6, chapter 7. Failure to provide the
statement to the escrow agent within the time provided for in this subsection shall extinguish any lien for
any unpaid assessment then due.
J. Notwithstanding any provision in the community documents or in any contract between the association
and a management company, unless the member directs otherwise, all payments received on a
member's account shall be applied first to any unpaid assessments, for unpaid charges for late payment
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of those assessments, for reasonable collection fees and for unpaid attorney fees and costs incurred with
respect to those assessments, in that order, with any remaining amounts applied next to other unpaid
fees, charges and monetary penalties or interest and late charges on any of those amounts.
33-1808. Flag display; political signs; caution signs; for sale, rent or lease signs; political
activities
A. Notwithstanding any provision in the community documents, an association shall not prohibit the
outdoor front yard or backyard display of any of the following:
1. The American flag or an official or replica of a flag of the United States army, navy, air force,
marine corps or coast guard by an association member on that member's property if the
American flag or military flag is displayed in a manner consistent with the federal flag code (P.L.
94-344; 90 Stat. 810; 4 United States Code sections 4 through 10).
2. The POW/MIA flag.
3. The Arizona state flag.
4. An Arizona Indian nations flag.
5. The Gadsden flag.
B. The association shall adopt reasonable rules and regulations regarding the placement and manner of
display of the American flag, the military flag, the POW/MIA flag, the Arizona state flag or an Arizona
Indian nations flag. The association rules may regulate the location and size of flagpoles, may limit the
member to displaying no more than two flags at once and may limit the height of the flagpole to no more
than the height of the rooftop of the member's home but shall not prohibit the installation of a flagpole in
the front yard or backyard of the member's property.
C. Notwithstanding any provision in the community documents, an association shall not prohibit the
indoor or outdoor display of a political sign by an association member on that member's property, except
that an association may prohibit the display of political signs earlier than seventy-one days before the day
of an election and later than three days after an election day. An association may regulate the size and
number of political signs that may be placed on a member's property if the association's regulation is no
more restrictive than any applicable city, town or county ordinance that regulates the size and number of
political signs on residential property. If the city, town or county in which the property is located does not
regulate the size and number of political signs on residential property, the association shall not limit the
number of political signs, except that the maximum aggregate total dimensions of all political signs on a
member's property shall not exceed nine square feet. For the purposes of this subsection, "political sign"
means a sign that attempts to influence the outcome of an election, including supporting or opposing the
recall of a public officer or supporting or opposing the circulation of a petition for a ballot measure,
question or proposition or the recall of a public officer.
D. Notwithstanding any provision in the community documents, an association shall not prohibit the use of
cautionary signs regarding children if the signs are used and displayed as follows:
1. The signs are displayed in residential areas only.
2. The signs are removed within one hour of children ceasing to play.
3. The signs are displayed only when children are actually present within fifty feet of the sign.
4. The temporary signs are no taller than three feet in height.
5. The signs are professionally manufactured or produced.
E. Notwithstanding any provision in the community documents, an association shall not prohibit children
who reside in the planned community from engaging in recreational activity on residential roadways that
are under the jurisdiction of the association and on which the posted speed limit is twenty-five miles per
hour or less.
F. Notwithstanding any provision in the community documents, an association shall not prohibit or charge
a fee for the use of, placement of or the indoor or outdoor display of a for sale, for rent or for lease sign
and a sign rider by an association member on that member's property in any combination, including a
sign that indicates the member is offering the property for sale by owner. The size of a sign offering a
property for sale, for rent or for lease shall be in conformance with the industry standard size sign, which
shall not exceed eighteen by twenty-four inches, and the industry standard size sign rider, which shall not
exceed six by twenty-four inches. This subsection applies only to a commercially produced sign, and an
association may prohibit the use of signs that are not commercially produced. With respect to real estate
for sale, for rent or for lease in the planned community, an association shall not prohibit in any way other
than as is specifically authorized by this section or otherwise regulate any of the following:
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1. Temporary open house signs or a member's for sale sign. The association shall not require the
use of particular signs indicating an open house or real property for sale and may not further
regulate the use of temporary open house or for sale signs that are industry standard size and
that are owned or used by the seller or the seller's agent.
2. Open house hours. The association may not limit the hours for an open house for real estate
that is for sale in the planned community, except that the association may prohibit an open house
being held before 8:00 a.m. or after 6:00 p.m. and may prohibit open house signs on the common
areas of the planned community.
3. An owner's or an owner's agent's for rent or for lease sign unless an association's documents
prohibit or restrict leasing of a member's property. An association shall not further regulate a for
rent or for lease sign or require the use of a particular for rent or for lease sign other than the for
rent or for lease sign shall not be any larger than the industry standard size sign of eighteen by
twenty-four inches on or in the member's property. If rental or leasing of a member's property is
not prohibited or restricted, the association may prohibit an open house for rental or leasing being
held before 8:00 a.m. or after 6:00 p.m.
G. Notwithstanding any provision in the community documents, an association shall not prohibit door to
door political activity, including solicitations of support or opposition regarding candidates or ballot issues,
and shall not prohibit the circulation of political petitions, including candidate nomination petitions or
petitions in support of or opposition to an initiative, referendum or recall or other political issue on property
normally open to visitors within the association, except that an association may do the following:
1. Restrict or prohibit the door to door political activity from sunset to sunrise.
2. Require the prominent display of an identification tag for each person engaged in the activity,
along with the prominent identification of the candidate or ballot issue that is the subject of the
support or opposition.
H. A planned community shall not make any regulations regarding the number of candidates supported,
the number of public officers supported or opposed in a recall or the number of propositions supported or
opposed on a political sign.
I. A planned community shall not require political signs to be commercially produced or professionally
manufactured or prohibit the utilization of both sides of a political sign.
J. A planned community is not required to comply with subsection G if the planned community restricts
vehicular or pedestrian access to the planned community. Nothing in this section requires a planned
community to make its common elements other than roadways and sidewalks that are normally open to
visitors available for the circulation of political petitions to anyone who is not an owner or resident of the
community.
K. An association or managing agent that violates subsection F of this section forfeits and extinguishes
the lien rights authorized under section 33-1807 against that member's property for a period of six
consecutive months from the date of the violation.
33-1810. Board of directors; annual audit
Unless any provision in the planned community documents requires an annual audit by a certified public
accountant, the board of directors shall provide for an annual financial audit, review or compilation of the
association. The audit, review or compilation shall be completed no later than one hundred eighty days
after the end of the association's fiscal year and shall be made available upon request to the members
within thirty days after its completion.
33-1811. Board of directors; contracts; conflict
If any contract, decision or other action for compensation taken by or on behalf of the board of directors
would benefit any member of the board of directors or any person who is a parent, grandparent, spouse,
child or sibling of a member of the board of directors or a parent or spouse of any of those persons, that
member of the board of directors shall declare a conflict of interest for that issue. The member shall
declare the conflict in an open meeting of the board before the board discusses or takes action on that
issue and that member may then vote on that issue. Any contract entered into in violation of this section
is void and unenforceable.

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33-1812. Proxies; absentee ballots; definition
A. Notwithstanding any provision in the community documents, after termination of the period of declarant
control, votes allocated to a unit may not be cast pursuant to a proxy. The association shall provide for
votes to be cast in person and by absentee ballot and, in addition, the association may provide for voting
by some other form of delivery, including the use of e-mail and fax delivery. Notwithstanding section 103708 or the provisions of the community documents, any action taken at an annual, regular or special
meeting of the members shall comply with all of the following if absentee ballots or ballots provided by
some other form of delivery are used:
1. The ballot shall set forth each proposed action.
2. The ballot shall provide an opportunity to vote for or against each proposed action.
3. The ballot is valid for only one specified election or meeting of the members and expires
automatically after the completion of the election or meeting.
4. The ballot specifies the time and date by which the ballot must be delivered to the board of
directors in order to be counted, which shall be at least seven days after the date that the board
delivers the unvoted ballot to the member.
5. The ballot does not authorize another person to cast votes on behalf of the member.
6. The completed ballot shall contain the name, address and signature of the person voting,
except that if the community documents permit secret ballots, only the envelope shall contain the
name, address and signature of the voter.
7. Ballots, envelopes and related materials, including sign-in sheets if used, shall be retained in
electronic or paper format and made available for member inspection for at least one year after
completion of the election.
B. Votes cast by absentee ballot or other form of delivery, including the use of e-mail and fax delivery, are
valid for the purpose of establishing a quorum.
C. Notwithstanding subsection A of this section, an association for a timeshare plan as defined in section
32-2197 may permit votes by a proxy that is duly executed by a unit owner.
D. For the purposes of this section, "period of declarant control" means the time during which the
declarant or persons designated by the declarant may elect or appoint the members of the board of
directors pursuant to the community documents or by virtue of superior voting power.
33-1813. Removal of board member; special meeting
A. Notwithstanding any provision of the declaration or bylaws to the contrary, all of the following apply to a
meeting at which a member of the board of directors, other than a member appointed by the declarant, is
proposed to be removed from the board of directors:
1. The members of the association who are eligible to vote at the time of the meeting may remove
any member of the board of directors, other than a member appointed by the declarant, by a
majority vote of those voting on the matter at a meeting of the members.
2. The meeting of the members shall be called pursuant to this section and action may be taken
only if a quorum is present.
3. The members of the association may remove any member of the board of directors with or
without cause, other than a member appointed by the declarant.
4. For purposes of calling for removal of a member of the board of directors, other than a member
appointed by the declarant, the following apply:
(a) In an association with one thousand or fewer members, on receipt of a petition that
calls for removal of a member of the board of directors and that is signed by the number
of persons who are eligible to vote in the association at the time the person signs the
petition equal to at least twenty-five percent of the votes in the association or by the
number of persons who are eligible to vote in the association at the time the person signs
the petition equal to at least one hundred votes in the association, whichever is less, the
board shall call and provide written notice of a special meeting of the association as
prescribed by section 33-1804, subsection B.
(b) Notwithstanding section 33-1804, subsection B, in an association with more than one
thousand members, on receipt of a petition that calls for removal of a member of the
board of directors and that is signed by the number of persons who are eligible to vote in
the association at the time the person signs the petition equal to at least ten percent of
the votes in the association or by the number of persons who are eligible to vote in the
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association at the time the person signs the petition equal to at least one thousand votes
in the association, whichever is less, the board shall call and provide written notice of a
special meeting of the association. The board shall provide written notice of a special
meeting as prescribed by section 33-1804, subsection B.
(c) The special meeting shall be called, noticed and held within thirty days after receipt of
the petition.
(d) For purposes of a special meeting called pursuant to this subsection, a quorum is
present if the number of owners who are eligible to vote in the association at the time the
person attends the meeting equal to at least twenty percent of the votes of the
association or the number of persons who are eligible to vote in the association at the
time the person attends the meeting equal to at least one thousand votes, whichever is
less, is present at the meeting in person or as otherwise permitted by law.
(e) If a civil action is filed regarding the removal of a board member, the prevailing party
in the civil action shall be awarded its reasonable attorney fees and costs.
(f) The board of directors shall retain all documents and other records relating to the
proposed removal of the member of the board of directors and any election or other
action taken for that director's replacement for at least one year after the date of the
special meeting and shall permit members to inspect those documents and records
pursuant to section 33-1805.
(g) A petition that calls for the removal of the same member of the board of directors shall
not be submitted more than once during each term of office for that member.
5. On removal of at least one but fewer than a majority of the members of the board of directors
at a special meeting of the membership called pursuant to this subsection, the vacancies shall be
filled as provided in the community documents.
6. On removal of a majority of the members of the board of directors at a special meeting of the
membership called pursuant to this subsection, or if the community documents do not provide a
method for filling board vacancies, the association shall hold an election for the replacement of
the removed directors at a separate meeting of the members of the association that is held not
later than thirty days after the meeting at which the members of the board of directors were
removed.
7. A member of the board of directors who is removed pursuant to this subsection is not eligible to
serve on the board of directors again until after the expiration of the removed board member's
term of office, unless the community documents specifically provide for a longer period of
ineligibility.
B. For an association in which board members are elected from separately designated voting districts, a
member of the board of directors, other than a member appointed by the declarant, may be removed only
by a vote of the members from that voting district, and only the members from that voting district are
eligible to vote on the matter or be counted for purposes of determining a quorum.
33-1814. Slum property; professional management
For any residential rental units that have been declared a slum property by the city or town pursuant to
section 33-1905 and that are in the planned community, the association is responsible for enforcing any
requirement for a licensed property management firm that is imposed by a city or town pursuant to
section 33-1906.
33-1815. Association authority; commercial signage
Notwithstanding any provision in the community documents, after an association has approved a
commercial sign, including its registered trademark that is located on properties zoned for commercial use
in the planned community, the association, including any subsequently elected board of directors, may
not revoke or modify its approval of that sign if the owner or operator of the sign has received approval for
the sign from the local or county governing body with jurisdiction over the sign.
33-1816. Solar energy devices; reasonable restrictions; fees and costs
A. Notwithstanding any provision in the community documents, an association shall not prohibit the
installation or use of a solar energy device as defined in section 44-1761.

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B. An association may adopt reasonable rules regarding the placement of a solar energy device if those
rules do not prevent the installation, impair the functioning of the device or restrict its use or adversely
affect the cost or efficiency of the device.
C. Notwithstanding any provision of the community documents, the court shall award reasonable attorney
fees and costs to any party who substantially prevails in an action against the board of directors of the
association for a violation of this section.
33-1817. Declaration amendment; design, architectural committees; review
A. Except during the period of declarant control, or if during the period of declarant control with the written
consent of the declarant in each instance, the following apply to an amendment to a declaration:
1. The declaration may be amended by the association, if any, or, if there is no association or
board, the owners of the property that is subject to the declaration, by an affirmative vote or
written consent of the number of owners or eligible voters specified in the declaration, including
the assent of any individuals or entities that are specified in the declaration.
2. An amendment to a declaration may apply to fewer than all of the lots or less than all of the
property that is bound by the declaration and an amendment is deemed to conform to the general
design and plan of the community, if both of the following apply:
(a) The amendment receives the affirmative vote or written consent of the number of
owners or eligible voters specified in the declaration, including the assent of any
individuals or entities that are specified in the declaration.
(b) The amendment receives the affirmative vote or written consent of all of the owners of
the lots or property to which the amendment applies.
3. Within thirty days after the adoption of any amendment pursuant to this section, the association
or, if there is no association or board, an owner that is authorized by the affirmative vote on or the
written consent to the amendment shall prepare, execute and record a written instrument setting
forth the amendment.
4. Notwithstanding any provision in the declaration that provides for periodic renewal of the
declaration, an amendment to the declaration is effective immediately on recordation of the
instrument in the county in which the property is located.
B. Notwithstanding any provision in the community documents:
1. Membership on a design review committee, an architectural committee or a committee that
performs similar functions, however denominated, for the planned community shall include at
least one member of the board of directors who shall serve as chairperson of the committee.
2. For new construction of the main residential structure on a lot or for rebuilds of the main
residential structure on a lot and only in a planned community that has enacted design guidelines,
architectural guidelines or other similar rules, however denominated, and if the association
documents permit the association to charge the member a security deposit and the association
requires the member to pay a security deposit to secure completion of the member's construction
project or compliance with approved plans, all of the following apply:
(a) The deposit shall be placed in a trust account with the following instructions:
(i) The cost of the trust account shall be shared equally between the association
and the member.
(ii) If the construction project is abandoned, the board of directors may determine
the appropriate use of any deposit monies.
(iii) Any interest earned on the refundable security deposit shall become part of
the security deposit.
(b) The association or the design review committee must hold a final design approval
meeting for the purpose of issuing approval of the plans, and the member or member's
agent must have the opportunity to attend the meeting. If the plans are approved, the
association's design review representative shall provide written acknowledgement that
the approved plans, including any approved amendments, are in compliance with all rules
and guidelines in effect at the time of the approval and that the refund of the deposit
requires that construction be completed in accordance with those approved plans.
(c) The association must provide for at least two on-site formal reviews during
construction for the purpose of determining compliance with the approved plans. The
member or member's agent shall be provided the opportunity to attend both formal
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reviews. Within five business days after the formal reviews, the association shall cause a
written report to be provided to the member or member's agent specifying any
deficiencies, violations or unapproved variations from the approved plans, as amended,
that have come to the attention of the association.
(d) Within thirty business days after the second formal review, the association shall
provide to the member a copy of the written report specifying any deficiencies, violations
or unapproved variations from the approved plans, as amended, that have come to the
attention of the association. If the written report does not specify any deficiencies,
violations or unapproved variations from the approved plans, as amended, that have
come to the attention of the association, the association shall promptly release the
deposit monies to the member. If the report identifies any deficiencies, violations or
unapproved variations from the approved plans, as amended, the association may hold
the deposit for one hundred eighty days or until receipt of a subsequent report of
construction compliance, whichever is less. If a report of construction compliance is
received before the one hundred eightieth day, the association shall promptly release the
deposit monies to the member. If a compliance report is not received within one hundred
eighty days, the association shall release the deposit monies promptly from the trust
account to the association.
(e) Neither the approval of the plans nor the approval of the actual construction by the
association or the design review committee shall constitute a representation or warranty
that the plans or construction comply with applicable governmental requirements or
applicable engineering, design or safety standards. The association in its discretion may
release all or any part of the deposit to the member before receiving a compliance report.
Release of the deposit to the member does not constitute a representation or warranty
from the association that the construction complies with the approved plans.
3. Approval of a construction project's architectural designs, plans and amendments shall not
unreasonably be withheld.
33-1818. Community authority over public roadways; applicability
A. Notwithstanding any provision in the community documents, after the period of declarant control, an
association has no authority over and shall not regulate any roadway for which the ownership has been
dedicated to or is otherwise held by a governmental entity.
B. This section applies only to those planned communities for which the declaration is recorded after
December 31, 2014.

Title 33, Chapter 18 HOMEOWNERS’ ASSOCIATION DWELLING
ACTIONS
Article 1 General Provisions
33-2001. Definitions
In this chapter, unless the context otherwise requires:
1. "Community documents" means condominium documents as defined in section 33-1202 or
community documents as defined in section 33-1802, including covenants, conditions and
restrictions and deed restrictions applicable to the dwelling.
2. "Dwelling" means a newly constructed single family or multifamily unit designed for residential
use and property and improvements that are either owned by a homeowners' association or
jointly by all of the members of a homeowners' association. Dwelling includes the systems, other
components and improvements that are part of a newly constructed single family or multifamily
unit at the time of construction.
3. "Good faith" means honesty in fact in the conduct or transaction concerned.
4. "Homeowners' association" means an association as defined in section 33-1202 or 33-1802.

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5. "Homeowners' association dwelling action" means any action involving a construction defect as
defined in section 12-1361 filed by a homeowners' association against the seller of a dwelling
arising out of or related to the design, construction, condition or sale of the dwelling.
6. "Seller" means any of the following:
(a) Any person, firm, partnership, corporation, association or other organization that is
engaged in the business of building or selling dwellings.
(b) Any person, firm, partnership, corporation, association or other organization that
performs functions relating to or furnishes the design, specifications, surveying, planning,
supervising, testing, constructing or observation of the constructing of a dwelling.
(c) A real estate broker or salesperson as defined in section 32-2101.
33-2002. homeowners’ association dwelling actions; conditions
A. Notwithstanding any provision to the contrary in title 10, chapter 39 or chapter 9 or 16 of this title and in
addition to any requirements prescribed in the community documents of a homeowners' association, a
homeowners' association may file a homeowners' association dwelling action only after all of the following
have occurred:
1. The board of directors has provided full disclosure in writing to all members of the association
of all material information relating to the filing of the action. The material information shall include
a statement that describes the nature of the action and the relief sought including any demands,
notices, offers to settle or responses to offers to settle made either by the association or the seller
and the expenses and fees that the association anticipates will be incurred, directly or indirectly,
in prosecuting the action including attorney fees, consultant fees, expert witness fees, court costs
and impacts on the values of the dwellings that are the subject of the action and those that are
not. The material information described by this paragraph shall be distributed to all members
before the meeting described in paragraph 2 of this subsection occurs.
2. The association has held a meeting of its members and board of directors for which reasonable
and adequate notice was provided to all members in the manner prescribed in section 33-1248 or
33-1804, as applicable.
3. The board of directors of the homeowners' association authorizes the filing of the action
pursuant to the procedures prescribed in the community documents. At the time of commencing
a dwelling action or amending a complaint to add a cause of action for a construction defect, the
homeowners' association has an affirmative duty to demonstrate compliance with the procedures
prescribed in the community documents and the requirements of this section.
4. The association provides the seller with notice of the alleged construction defects and the right
to repair or replace the alleged construction defects pursuant to section 12-1363.
B. If the notice required by subsection A, paragraph 2 of this section is provided to the homeowners'
association's members less than sixty days before the expiration of a statute of limitations affecting the
right of the association to bring a homeowners' association dwelling action, the statute of limitations is
tolled for sixty days. The homeowners' association may meet the remaining requirements of subsection A
of this section during the tolling period.
C. Notwithstanding any provision to the contrary in title 10, chapter 39 or in chapter 9 or 16 of this title and
in addition to any requirements prescribed in the community documents of a homeowners' association,
the board of directors of a homeowners' association or its authorized representative shall disclose in
writing to the members of the association a plan that describes the manner in which the proceeds of a
homeowners' association dwelling action, whether obtained by way of judgment, settlement or other
means, have been or will be allocated. The plan shall be disclosed within thirty days after the association
receives the proceeds of any homeowners' association dwelling action. The plan is not binding on the
homeowners' association, but the board of directors or its authorized representative must disclose any
material changes to the plan to the members of the association within thirty days of making the changes.
D. A homeowners' association shall prepare and preserve for a period of five years records that are
adequate to demonstrate its compliance with this section.
E. A director who acts in good faith pursuant to this chapter is not liable for any act or failure to act
pursuant to this chapter. In any action filed against a director arising out of any act or failure to act
pursuant to this chapter, a director is presumed in all cases to have acted in good faith. The burden is on
the party challenging a director's conduct to establish by clear and convincing evidence facts that rebut
the good faith presumption.
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F. In any contested dwelling action, the seller has standing to assert a failure of the homeowners'
association to comply with the procedures prescribed by the community documents and the requirements
of this section.
33-2003. Applicability
A. This chapter applies only to homeowners' association dwelling actions. This chapter does not apply to:
1. Actions filed by individual members of a homeowners' association against a seller.
2. Claims for personal injury, death or damage to property other than a dwelling.
3. Common law fraud claims.
4. Proceedings brought pursuant to title 32, chapter 10, whether filed by a homeowners'
association or by individual members of a homeowners' association.
B. A homeowners' association dwelling action is also subject to title 12, chapter 8, article 14.

Title
10,
Chapter
CORPORATIONS

24

GENERAL

PROVISIONS-NONPROFIT

Article 1 Short Title
10-3101. Short Title
Chapters 24 through 40 shall be known and may be cited as the Arizona nonprofit corporation act.
10-3102. Reservation of power to amend or repeal
The legislature has the power to amend or repeal all or part of this act at any time and all domestic and
foreign corporations subject to this act are governed by the amendment or repeal.

Article 2 Filing Documents and Fees-Nonprofit Corporations
10-3120. Filing Requirements
A. In order to qualify for filing by the commission, a document shall satisfy the requirements of this section
and any other section of chapters 24 through 42 of this title that adds to or varies these requirements.
B. Chapters 24 through 42 of this title require or permit filing of the document in the office of the
commission.
C. The document shall contain the information required by chapters 24 through 42 of this title. It may
contain other information.
D. The document shall be typewritten or printed and shall be legible and capable of microfilm or other
process reduction and subsequent reproduction as determined by the commission.
E. The document and any exhibits to the document shall be in the English language or accompanied by
an English translation certified as accurate by or on behalf of the person causing the document to be
delivered for filing.
F. The document shall be executed:
1. By the presiding officer or its board of directors of a domestic or foreign corporation, its
president or by another of its officers.
2. If directors have not been selected or the corporation has not been formed, by an incorporator.
3. If the corporation is in the hands of a receiver, trustee or other court appointed fiduciary, by that
fiduciary.
G. The document shall state the name of each person who signs it and the capacity in which each person
signs. The document may but need not contain:
1. The corporate seal.
2. An attestation by the secretary or an assistant secretary.
3. An acknowledgment, verification or proof.
H. If the commission has prescribed a mandatory form for the document under section 10-3121, the
document shall be in or on the prescribed form.
I. Except as provided in subsection J of this section and sections 10-3503 and 10-11509, the document
shall be delivered to the office of the commission for filing and shall be accompanied by the correct fee
and any other payment or penalty required by chapters 24 through 42 of this title or other law.
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J. Notwithstanding subsection I of this section:
1. A person may deliver by means of a fax or electronic transmission a document that is required
or permitted by chapters 24 through 42 of this title to be delivered to the commission for filing.
The person shall retain the original document for at least twelve months in the books and records
of the corporation or of the person making the delivery for filing, if the delivery is not made on
behalf of the corporation, and the person shall make the original documents available for
inspection and copying by the commission on reasonable notice.
2. A document that is reproduced at a fax machine or through an electronic transmission at the
commission is deemed delivered to the commission:
(a) On the date of the reproduction if reproduced on or before 5:00 p.m. mountain
standard time and if the day is a business day of the commission.
(b) On the next succeeding business day if reproduced after 5:00 p.m. mountain standard
time and if the day is a business day of the commission.
3. On the request of the person transmitting the document, the commission shall confirm by fax or
electronic transmission or other writing the receipt of the document.
4. A person shall pay and deliver to the commission any fee or penalty imposed by this title with
respect to delivery of a document to the commission for filing in the manner as the commission
determines.
5. If the commission determines that the legality of the document reproduced by means of a fax
or electronic transmission is not sufficient, the commission may require that either:
(a) The document be delivered to the commission by means of an additional fax or
electronic transmission.
(b) An original document be delivered to the commission by means other than a fax or
electronic transmission.
6. The commission shall not file a document if any required amount is not paid as provided in
paragraph 4 of this subsection or if any required additional counterpart is not delivered as
provided in paragraph 5 of this subsection.
7. A reproduced document delivered under this subsection is deemed to satisfy any requirement
in chapters 24 through 42 of this title for delivery of an original and one or more copies of the
document. A document subject to this paragraph is deemed to have been delivered on the date
on which it was delivered as provided in paragraph 2 of this subsection only if the first
reproduction at a minimum permits identification of the corporation to which the document
pertains and of the general nature of the document and the commission subsequently determines
that paragraphs 4 and 5 of this subsection and any other requirements of chapters 24 through 42
of this title regarding the document have been satisfied.
8. The commission may prescribe the format of an electronic document delivered to the
commission pursuant to this subsection.
10-3121. Forms
A. Certificates, reports and statements required by section 10-3202, subsection D and sections 10-11622
and 10-11623 to be delivered to and filed by the commission shall be made on the forms that are
prescribed and furnished by the commission.
B. The commission may prescribe and furnish on request forms for other documents required or permitted
to be filed by chapters 24 through 40 of this title, but their use is not mandatory.
10-3122. Filing, service and copying fees; public access fund; expedited report filing and access;
same day and next day services
A. The commission shall collect and deposit, pursuant to sections 35-146 and 35-147, in the state general
fund the following nonrefundable fees when the documents described in this subsection are delivered to
the commission for filing or issuance:
Document
Fee
1. Articles of incorporation
$ 30
2. Application for use of indistinguishable name
$ 10
3. Application for reserved name
$ 10
4. Notice of transfer of reserved name
$ 10
5. Application for registered name
$ 10
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6. Application for renewal of registered name
$ 10
7. Agent's statement of resignation
$ 10
8. Amendment of articles of incorporation
$ 25
9. Restatement of articles of incorporation
with amendment of articles
$ 25
10. Statement of merger, interest exchange,
conversion, domestication or division if
the entity responsible for filing the
statement is a nonprofit corporation
$100
11. Articles of dissolution
$ 25
12. Articles of revocation of dissolution
$ 25
13. Application for reinstatement following
administrative dissolution or revocation,
in addition to other fees and penalties due
$ 25
14. Application for authority
$150
15. Application for withdrawal
$ 25
16. Annual report
$ 10
17. Articles of correction
$ 25
18. Application for certificate of good standing
$ 10
B. The commission shall collect a nonrefundable fee of twenty-five dollars each time process is served on
it under chapters 24 through 42 of this title. The party to a proceeding causing service of process is
entitled to recover this fee as costs if the party prevails in the proceeding. The fee collected pursuant to
this subsection shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.
C. The commission shall charge and collect fifty cents per page for copying documents on request. The
commission shall also charge five dollars plus fifty cents per page for certifying the copy of a filed
document. The fees collected pursuant to this subsection shall be deposited, pursuant to sections 35-146
and 35-147, in the state general fund.
D. A penalty of one hundred dollars payable in addition to other fees accrues and is payable if a foreign
corporation fails to file an amendment, restated articles that include an amendment, or articles of merger
within sixty days of the time of filing in the jurisdiction in which the corporation is domiciled. The penalty
collected pursuant to this subsection shall be deposited, pursuant to sections 35-146 and 35-147, in the
state general fund.
E. Pursuant to section 10-122, subsection F, the commission shall provide for and establish an expedited
service for the filing of all documents and services provided pursuant to chapters 24 through 42 of this
title.
F. Pursuant to section 10-122, subsection F, the commission may provide for and establish same day and
next day services for the filing of any documents and services provided pursuant to chapters 24 through
42 of this title.
G. The commission may charge persons who access the commission's data processing system that is
maintained pursuant to section 10-122.01 from remote locations and persons requesting special
computer generated printouts, reports and tapes a reasonable fee that does not exceed the cost of the
time, equipment and personnel necessary to provide this service or product as determined by the
commission.
H. Except as provided in section 10-122.01, subsection B, paragraph 3, in addition to any fee charged
pursuant to this section, the commission may charge and collect the following nonrefundable fees to help
defray the cost of the improved data processing system that is maintained pursuant to section 10-122.01:
1. Filing articles of incorporation of a domestic corporation, ten dollars.
2. Filing an application of a foreign corporation for authority to transact business in this state,
twenty-five dollars.
I. All monies received pursuant to subsections E through H of this section shall be deposited, pursuant to
sections 35-146 and 35-147, in the public access fund established by section 10-122.01.
J. Fees charged pursuant to this section are exempt from section 39-121.03, subsection A, paragraph 3.
K. Any person may advance monies to the commission to pay fees required pursuant to this section for
future filings and services. All monies received pursuant to this subsection shall be deposited, pursuant
to sections 35-146 and 35-147, in the money on deposit account in the public access fund established by
section 10-122.01.
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10-3123. Effective time and date of document
A. Except as provided in subsections B and C of this section, a document delivered to the commission for
filing is effective when the document is delivered to the commission for filing.
B. A document may specify a delayed effective time or date, or both, and if so, the document is effective
at the time and date specified. If a delayed effective date but no time is specified, the document is
effective at 12:01 a.m. mountain standard time on that date. A delayed effective date for a document may
not be later than the ninetieth day after the date it is delivered.
C. Subject to section 10-3124, if the commission determines that the requirements of chapters 24 through
40 of this title for filing have not been met, the document shall not be filed and, except as provided in
section 10-3203, the delivery of the document is ineffective. If the commission determines that the
requirements for filing have been met, the commission shall file the document as provided in section 103125 and the filing is effective as of the date and time determined pursuant to subsection A or B of this
section.
10-3124. Correcting filed document; articles of incorporation; application for authority to conduct
affairs
A. A domestic or foreign corporation may correct a document that has been filed by the commission if the
document either:
1. Contains an incorrect statement and the correction does not materially alter a substantive
provision.
2. Was defectively executed, attested, sealed, verified or acknowledged.
B. A document is corrected by both:
1. Preparing articles of correction that:
(a) Describe the document or attach a copy of it to the articles.
(b) Specify the date the document was delivered to the commission.
(c) Specify the incorrect statement and the reason it is incorrect or the manner in which
the execution was defective.
(d) Correct the incorrect statement or other defect.
2. Delivering the articles to the commission for filing.
C. Articles of correction are effective on the effective date of the document they correct except as to
persons who rely on the incorrect statement or other defect and who are adversely affected by the
correction. As to those persons, articles of correction are effective as provided in section 10-123.
D. If articles of incorporation, articles of domestication or an application for authority to conduct affairs is
rejected for filing by the commission, the articles or application may be resubmitted within thirty days after
the date of rejection. If the resubmitted articles or application cures the defect that caused the rejection,
the resubmitted articles or application shall be filed by the commission and is effective on the date that
would have been the effective date of filing the articles or application if the articles or application had not
been rejected.
10-3125. Filing duty of commission
A. At the time of delivery of a document to the commission, the commission shall stamp, endorse or
attach the date and time of delivery of the document.
B. The commission shall file a document delivered to the commission for filing if both of the following
apply:
1. The commission determines that the document satisfies the requirements of chapters 24
through 40 of this title.
2. The corporation filing the document or on whose behalf the document is being filed is in good
standing pursuant to section 10-3128.
C. The commission may file a document delivered to the commission in which either the corporation
has filed articles of dissolution or the corporation has filed a document that is required to bring the
corporation into good standing. The commission shall provide notice of the filing to the domestic or
foreign corporation or its representative.
D. If the commission refuses to file a document, it shall provide notice of the refusal to the domestic or
foreign corporation or its representative within five days after the determination of the refusal to file,
together with a brief written explanation of the reason for the refusal.
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E. The filing or refusing to file a document by the commission does not:
1. Affect the validity or invalidity of the document in whole or in part, except to the extent that filing
is required to make the document valid.
2. Relate to the correctness or incorrectness of information contained in the document.
3. Create a presumption that the document is valid or invalid or that information contained in the
document is correct or incorrect.
10-3127. Evidentiary effect of copy of filed document
A stamp affixed to a copy of a document filed by the commission, bearing the signature of the executive
director of the commission, which may be in facsimile, and the seal of the commission, is conclusive
evidence that the original document is on file with the commission.
10-3128. Certificate of good standing
A. A person may apply to the commission to furnish a certificate of good standing for a domestic or
foreign corporation.
B. The certificate of good standing sets forth all of the following:
1. The domestic corporation's corporate name or the foreign corporation's corporate name used
in this state.
2. That either:
(a) The domestic corporation is incorporated under the law of this state and the date of its
incorporation.
(b) The foreign corporation is authorized to transact business in this state.
3. That all affidavits and annual reports required before the date of the certificate have been filed
with the commission.
4. That all annual filing fees due before the date of the certificate have been paid.
5. That according to the records of the commission, the corporation is in good standing in this
state.
C. Subject to any qualification stated in the certificate, a certificate of good standing issued by the
commission may be relied on as conclusive evidence of the matters stated in the certificate.

Article 3 Arizona Corporation Commission
10-3130. Powers
The commission has the power and authority reasonably necessary to enable it to administer this title
efficiently and to perform the duties imposed on it by this title, including the power and authority to make
rules and regulations for those purposes.

Article 4 Definitions, Notice, Private Foundations, Judicial Relief and Religious
Organizations
10-3140. Definitions
In chapters 24 through 40 of this title, unless the context otherwise requires:
1. "Acknowledged" or "acknowledgment" means either an acknowledgment pursuant to title 33,
chapter 4, article 5 or the signature, without more, of the person or persons signing the
instrument, in which case the signature or signatures constitute the affirmation or
acknowledgment of the signatory, under penalties of perjury, that the instrument is the act and
deed of the signatory and that the facts stated in the instrument are true.
2. "Act of the board of directors" means either:
(a) An act of the majority of the directors present at a duly called meeting at which a
quorum is present, unless the act of a greater number is required by chapters 24 through
40 of this title, the articles of incorporation or the bylaws.
(b) Action taken by written consent of the directors in accordance with chapters 24
through 40 of this title.
3. "Act of the members" means either:
(a) An act adopted or rejected by a majority of the votes represented and voting at a duly
held meeting at which a quorum is present where affirmative votes also constitute a
majority of the required quorum unless a greater number of votes is required by chapters
24 through 40 of this title, the articles of incorporation or the bylaws.
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(b) An action taken by written consent of the members in accordance with chapters 24
through 40 of this title.
(c) An action taken by written ballot of the members in accordance with this chapter.
4. "Address" means a mailing address.
5. "Affiliate" means a person that directly or indirectly, through one or more intermediaries
controls, is controlled by or is under common control with the person specified.
6. "Articles of incorporation" means the original or restated articles of incorporation or articles of
merger and all amendments to the articles of incorporation or merger and includes amended and
restated articles of incorporation and articles of amendment and merger.
7. "Board", "board of directors" or "board of trustees" means the group of persons vested with the
direction of the affairs of the corporation irrespective of the name by which the group is
designated, except that no person or group of persons shall be deemed to be the board of
directors solely because of powers delegated to that person or group pursuant to section 103801, subsection C.
8. "Business day" means a day that is not a Saturday, a Sunday or any other legal holiday in this
state.
9. "Bylaws" means the code of rules adopted for the regulation or management of the affairs of
the corporation irrespective of the name by which those rules are designated.
10. "Certificate of disclosure" means the certificate of disclosure described in section 10-3202.
11. "Class" refers to a group of memberships that have the same rights with respect to voting,
dissolution, redemption and transfer. Rights are the same if they are determined by a formula
applied uniformly.
12. "Commission" means the Arizona corporation commission.
13. "Conspicuous" means so written that a reasonable person against whom the writing is to
operate should have noticed it. For example, printing in italics, boldface or contrasting color or
typing in capitals or underlined is conspicuous.
14. "Corporation" or "domestic corporation" means a nonprofit corporation that is not a foreign
corporation and that is incorporated under or subject to chapters 24 through 40 of this title.
15. "Corporation sole" means a corporation formed pursuant and subject to chapter 42, article 1
of this title.
16. "Court" means the superior court of this state.
17. "Delegates" means those persons elected or appointed to vote in a representative assembly
for the election of a director or directors or on other matters.
18. "Deliver" includes sending by mail, private courier, fax or electronic transmission.
19. "Delivery" means actual receipt by the person or entity to which directed and for electronic
transmissions means receipt as described in section 44-7015, subsection B.
20. "Directors" or "trustees" means individuals, designated in the articles of incorporation or
bylaws or elected by the incorporators, and their successors and individuals elected or appointed
by any other name or title to act as members of the board.
21. "Dissolved" means the status of a corporation on either:
(a) Effectiveness of articles of dissolution pursuant to section 10-11403, subsection B or
section 10-11421, subsection B.
(b) A decree pursuant to section 10-11433, subsection B becoming final.
22. "Distribution" means a direct or indirect transfer of money or other property or incurrence of
indebtedness by a corporation to or for the benefit of its members in respect of any of its
membership interests. A distribution may be in the form of any of the following:
(a) A declaration of payment of a dividend.
(b) Any purchase, redemption or other acquisition of membership interests.
(c) A distribution of indebtedness.
(d) Otherwise.
23. "Effective date of notice" is prescribed in section 10-3141.
24. "Electronic transmission" means an electronic record as defined in section 44-7002 and that
is sent pursuant to section 44-7015, subsection A.
25. "Employee" means an officer, director or other person who is employed by the corporation.
26. "Entity" includes a corporation, foreign corporation, not for profit corporation, business
corporation, foreign business corporation, profit and not for profit unincorporated association,
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close corporation, corporation sole, limited liability company or registered limited liability
partnership, a professional corporation, association or limited liability company or registered
limited liability partnership, a business trust, estate, partnership, trust or joint venture, two or more
persons having a joint or common economic interest, any person other than an individual and a
state, the United States and a foreign government.
27. "Executed by the corporation" means executed by manual or facsimile signature on behalf of
the corporation by a duly authorized officer or, if the corporation is in the hands of a receiver or
trustee, by the receiver or trustee.
28. "Filing" means the commission completing the following procedure with respect to any
document delivered for that purpose:
(a) Determining that the filing fee requirements of this title have been satisfied.
(b) Determining that the document appears in all respects to conform to the requirements
of chapters 24 through 40 of this title.
(c) On making the determinations, endorsement of the word "filed" with the applicable
date on or attached to the document and the return of notice of the filing to the person
who delivered the document or the person's representative.
29. "Foreign corporation" means a corporation that is organized under a law other than the law of
this state and that would be a nonprofit corporation if formed under the laws of this state.
30. "Governmental subdivision" includes an authority, county, district, municipality and political
subdivision.
31. "Includes" and "including" denotes a partial definition.
32. "Individual" includes the estate of an incompetent individual.
33. "Insolvent" means inability of a corporation to pay its debts as they become due in the usual
course of its business.
34. "Known place of business" means the known place of business required to be maintained
pursuant to section 10-3501.
35. "Mail", "to mail" or "have mailed" means to deposit or have deposited a communication in the
United States mail with first class postage prepaid.
36. "Means" denotes an exhaustive definition.
37. "Member" means, without regard to what a person is called in the articles of incorporation or
bylaws, any person or persons who, pursuant to a provision of a corporation's articles of
incorporation or bylaws, have the right to vote for the election of a director or directors. A person
is not a member by virtue of any of the following:
(a) Any rights that person has as a delegate.
(b) Any rights that person has to designate a director or directors.
(c) Any rights that person has as a director.
(d) Being referred to as a member in the articles of incorporation, bylaws or any other
document, if the person does not have the right to vote for the election of a director or
directors.
38. "Membership" refers to the rights and obligations a member or members have pursuant to a
corporation's articles of incorporation and bylaws and chapters 24 through 40 of this title.
39. "Newspaper" has the same meaning prescribed in section 39-201.
40. "Notice" and "notify" are prescribed in section 10-3141.
41. "Person" includes individual and entity.
42. "President" means that officer designated as the president in the articles of incorporation or
bylaws or, if not so designated, that officer authorized in the articles of incorporation, bylaws or
otherwise to perform the functions of the chief executive officer, irrespective of the name by which
designated.
43. "Principal office" means the office, in or out of this state, so designated in the annual report
where the principal executive offices of a domestic or foreign corporation are located or in any
other document executed by the corporation by an officer and delivered to the commission for
filing. If an office has not been so designated, principal office means the known place of business
of the corporation.
44. "Proceeding" includes a civil suit and a criminal, administrative and investigatory action.
45. "Publish" means to publish in a newspaper of general circulation in the county of the known
place of business for three consecutive publications.
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46. "Record date" means the date, if any, established under chapter 29 or 30 of this title on which
a corporation determines the identity of its members and their membership interests for purposes
of chapters 24 through 40 of this title. The determinations shall be made as of the close of
business on the record date unless another time for doing so is specified when the record date is
fixed.
47. "Secretary" means that officer designated as the secretary in the articles of incorporation or
bylaws or that officer authorized in the articles of incorporation, the bylaws or otherwise to
perform the functions of secretary, irrespective of the name by which designated.
48. "State" if referring to a part of the United States, includes a state and commonwealth and their
agencies and governmental subdivisions and a territory and insular possession of the United
States and their agencies and governmental subdivisions.
49. "Treasurer" means that officer designated as the treasurer in the articles of incorporation or
bylaws or that officer authorized in the articles of incorporation, bylaws or otherwise to perform
the functions of treasurer, irrespective of the name by which designated.
50. "United States" includes a district, authority, bureau, commission and department and any
other agency of the United States.
51. "Vice-president" means an officer designated as a vice-president in the articles of
incorporation or bylaws or an officer authorized in the articles of incorporation or the bylaws or
otherwise to perform the functions of a vice-president, irrespective of the name by which
designated.
52. "Vote" includes authorization by written ballot and written consent.
53. "Voting power" means the total number of votes entitled to be cast for the election of directors
at the time the determination of voting power is made, excluding a vote that is contingent on the
happening of a condition or event that has not occurred at the time. If a class is entitled to vote as
a class for directors, the determination of voting power of the class shall be based on the
percentage of the number of directors the class is entitled to elect out of the total number of
authorized directors.
10-3141. Notice
A. Notice under chapters 24 through 40 of this title must be in writing unless oral notice is reasonable
under the circumstances. Oral notice is not permitted if written notice is required under chapters 24
through 40 of this title.
B. Notice may be communicated in person, by telephone, telegraph, teletype, fax, electronic transmission
or other form of wire or wireless communication, or by mail or private carrier. If these forms of personal
notice are impracticable, notice may be communicated by a newspaper of general circulation in the area
where published or by radio, television or other form of public broadcast communication.
C. Written notice by a domestic or foreign corporation to its members or directors, if in comprehensible
form, is effective when mailed, if correctly addressed to the member's or director's address shown on the
corporation's current list of members or directors. Notice given by electronic transmission, if in
comprehensible form, is effective when directed to an e-mail address shown on the corporation's current
list of members or directors.
D. A written notice or report by a domestic or foreign corporation to its members delivered as part of a
newsletter, magazine or other publication regularly sent to members shall constitute a written notice or
report if addressed or delivered to the member's address shown in the corporation's current list of
members, or in the case of members who are residents of the same household and who have the same
address in the corporation's current list of members, if addressed or delivered to one of such members, at
the address appearing on the current list of members.
E. Written notice to a domestic or foreign corporation that is authorized to transact business in this state,
other than in its capacity as a member, may be addressed to its statutory agent at its known place of
business or to the corporation or its secretary at its principal office shown in its most recent annual report
on file with the commission, or in the case of a foreign corporation that has not yet delivered an annual
report in its application for a certificate of authority. Unless otherwise prohibited in chapters 24 through 40
of this title, written notice may also be given by electronic transmission when directed to an e-mail
address that the corporation or its statutory agent provides.
F. Except as provided in subsection C of this section, written notice, if in a comprehensible form, is
effective at the earliest of the following:
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1. When received.
2. Five days after its deposit in the United States mail as evidenced by the postmark, if mailed
postpaid and correctly addressed.
3. On the date shown on the return receipt, if sent by registered or certified mail, return receipt
requested, and if the receipt is signed by or on behalf of the addressee.
G. Oral notice is effective when communicated if communicated in a comprehensible manner.
H. If chapters 24 through 40 of this title prescribe notice requirements for particular circumstances, those
requirements govern. If articles of incorporation or bylaws prescribe notice requirements that are not
inconsistent with this section or other provisions of chapters 24 through 40 of this title those requirements
govern.
10-3150. Private foundations; definition
A. Except if otherwise determined by a court of competent jurisdiction or to the extent no longer required
by the internal revenue code of 1986, a corporation that is a private foundation as defined in section
509(a) of the internal revenue code of 1986 shall:
1. Distribute such amounts for each taxable year at a time and in a manner that does not subject
the corporation to tax under section 4942 of the code.
2. Not engage in any act of self-dealing as defined in section 4941(d) of the code.
3. Not retain any excess business holdings as defined in section 4943(c) of the code.
4. Not make any taxable expenditures as defined in section 4944 of the code.
5. Not make any taxable expenditures as defined in section 4945(d) of the code.
B. For the purposes of this section, "code" means the internal revenue code of 1986 as amended.
10-3160. Judicial relief
A. If for any reason it is impractical or impossible for any corporation to call or conduct a meeting of its
members, delegates or directors, or otherwise obtain their consent, in the manner prescribed by its
articles of incorporation, bylaws, or chapters 24 through 40 of this title, on petition of a director, officer,
delegate or member, the court may order that such a meeting be called or that a written ballot or other
form of obtaining the vote of members, delegates or directors be authorized, in such a manner as the
court finds fair and equitable under the circumstances.
B. The court, in an order issued pursuant to this section, shall provide for a method of notice reasonably
designed to give actual notice to all persons who would be entitled to notice of a meeting held pursuant to
the articles of incorporation, bylaws and chapters 24 through 40 of this title, whether or not the method
results in actual notice to all such persons or conforms to the notice requirements that would otherwise
apply. In a proceeding under this section the court may determine who the members or directors are.
C. The order issued pursuant to this section may dispense with any requirement relating to the holding of
or voting at meetings or obtaining votes, including any requirement as to quorums or as to the number or
percentage of votes needed for approval, than would otherwise be imposed by the articles of
incorporation, bylaws, or chapters 24 through 40 of this title.
D. If practical, any order issued pursuant to this section shall limit the subject matter of meetings or other
forms of consent authorized to items, including amendments to the articles of incorporation or bylaws, the
resolution of which will or may enable the corporation to continue managing its affairs without being
subject to this section.
E. Notwithstanding subsection D, an order under this section may also authorize the obtaining of the
votes and approvals that are necessary for the dissolution, merger or sale of assets.
F. Any meeting or other method of obtaining the vote of members, delegates or directors conducted
pursuant to an order issued under this section, and that complies with all the provisions of that order, is a
valid meeting or vote and shall have the same force and effect as if it complied with every requirement
imposed by the articles of incorporation, bylaws and chapters 24 through 40 of this title.
10-3180. Religious corporations; constitutional protections
If religious doctrine governing the affairs of a corporation organized primarily for religious purposes is
inconsistent with the provisions of chapters 24 through 40 of this title on the same subject, the religious
doctrine shall control to the extent required by the Constitution of the United States or the constitution of
this state or both.

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Title 10, Chapter 25 INCORPORATION-NONPROFIT CORPORATIONS
Article 1 Incorporation
10-3201. Incorporators
One or more persons may act as the incorporator or incorporators of a corporation by delivering articles of
incorporation and a certificate of disclosure to the commission for filing.
10-3202. Articles of incorporation; violation; classification
A. The articles of incorporation shall set forth:
1. A corporate name for the corporation that satisfies the requirements of section 10-3401.
2. A brief statement of the character of affairs that the corporation initially intends to conduct. This
statement does not limit the affairs that the corporation may conduct.
3. The name and address of each person who is to serve as a director until a successor is
elected and qualifies.
4. The name, street address and signature of the corporation's statutory agent.
5. The street address of the known place of business for the corporation, if different from that of
its statutory agent.
6. The name and address of each incorporator.
7. Whether or not the corporation will have members.
8. Any provision elected by the incorporators that under chapters 24 through 40 of this title or any
other law of this state may be elected only by specific inclusion in the articles of incorporation.
9. The signatures of all incorporators.
B. The articles of incorporation may set forth:
1. A provision eliminating or limiting the liability of a director to the corporation or its members for
money damages for any action taken or any failure to take any action as a director, except liability
for any of the following:
(a) The amount of a financial benefit received by a director to which the director is not
entitled.
(b) An intentional infliction of harm on the corporation or the members.
(c) A violation of section 10-3833.
(d) An intentional violation of criminal law.
2. A provision permitting or making obligatory indemnification of a director for liability, as defined
in section 10-3850, to any person for any action taken, or any failure to take any action, as a
director, except liability for any of the exceptions described in paragraph 1 of this subsection.
3. Any other provision, not inconsistent with law.
C. The articles of incorporation need not set forth any of the corporate powers enumerated in chapters 24
through 40 of this title.
D. The certificate of disclosure shall set forth all of the following:
1. The following information regarding all persons who at the time of its delivery are officers,
directors, trustees and incorporators:
(a) Whether any of the persons have been convicted of a felony involving a transaction in
securities, consumer fraud or antitrust in any state or federal jurisdiction within the fiveyear period immediately preceding the execution of the certificate.
(b) Whether any of the persons have been convicted of a felony, the essential elements
of which consisted of fraud, misrepresentation, theft by false pretenses or restraint of
trade or monopoly in any state or federal jurisdiction within the five-year period
immediately preceding the execution of the certificate.
(c) Whether any of the persons are or have been subject to an injunction, judgment,
decree or permanent order of any state or federal court entered within the five-year
period immediately preceding the execution of the certificate, if the injunction, judgment,
decree or permanent order involved any of the following:
(i) The violation of fraud or registration provisions of the securities laws of that
jurisdiction.
(ii) The violation of consumer fraud laws of that jurisdiction.
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(iii) The violation of the antitrust or restraint of trade laws of that jurisdiction.
(d) With regard to any of the persons who have been convicted of the crimes or who are
the subject of the judicial action described in subdivisions (a), (b) and (c) of this
paragraph, information regarding:
(i) Identification of the persons, including present full name, all prior names or
aliases, including full birth name, present home address, all prior addresses for
the immediately preceding five-year period and date and location of birth.
(ii) The nature and description of each conviction or judicial action, the date and
location, the court and public agency involved, and the file or case number of the
case.
2. A brief statement disclosing whether any persons who at the time of its delivery are officers,
directors, trustees and incorporators and who have served in any such capacity in any other
corporation on the bankruptcy or receivership of the other corporation. If so, for each corporation,
the certificate shall include:
(a) The names and addresses of each corporation and the person or persons involved.
(b) The state in which each corporation:
(i) Was incorporated.
(ii) Transacted business.
(c) The dates of corporate operation.
3. The signatures of all the incorporators.
4. The date of its execution, which shall be not more than thirty days before its delivery to the
commission.
5. A declaration by each signer that the signer swears to its contents under penalty of law.
E. The certificate of disclosure may set forth the name and address of any other person whom the
incorporator or incorporators choose to be the subject of those disclosures required under subsection D,
paragraph 1 of this section.
F. If within sixty days after delivering the articles of incorporation and certificate of disclosure to the
commission any person becomes an officer, director or trustee and the person was not the subject of the
disclosures set forth in the certificate of disclosure, the incorporator or incorporators or, if the organization
of the corporation has been completed as provided in section 10-3205, the corporation shall execute and
deliver to the commission within the sixty-day period a declaration, sworn to under penalty of law, setting
forth all information required by subsection D, paragraph 1 of this section, regarding the person. If the
incorporator or incorporators or, as applicable, the corporation fails to comply with this subsection, the
commission may administratively dissolve the corporation pursuant to section 10-11421.
G. If any of the persons described in subsection D, paragraph 1 of this section have been convicted of the
crimes or are the subject of the judicial action described in subsection D, paragraph 1 of this section, the
commission may direct detailed interrogatories to the persons requiring any additional relevant
information deemed necessary by the commission. The interrogatories shall be completely answered
within thirty days after mailing of the interrogatories. With respect to corporations incorporating or seeking
authority to conduct affairs, articles of incorporation or an application for authority shall not be filed until all
outstanding interrogatories have been answered to the satisfaction of the commission. With respect to
existing domestic and foreign corporations, if the interrogatories are not answered as provided in this
subsection or the answers to the interrogatories otherwise indicate proper grounds for an administrative
dissolution, the commission shall initiate an administrative dissolution in accordance with chapters 24
through 40 of this title.
H. On a quarterly updated basis, the commission shall provide to the attorney general a list of all persons
who are convicted of the crimes or who are the subject of the judicial action described in subsection D,
paragraph 1 of this section as indicated by the certificate of disclosure filed during the preceding three
months.
I. Any person who executed or contributed information for a certificate of disclosure and who intentionally
makes any untrue statement of material fact or withholds any material fact with regard to the information
required in subsection D, paragraph 1 of this section is guilty of a class 6 felony.

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10-3203. Incorporation
A. Unless a delayed effective date is specified in the articles of incorporation, incorporation occurs and
the corporate existence begins when the articles of incorporation and certificate of disclosure are
delivered to the commission for filing.
B. The commission's filing of the articles of incorporation and certificate of disclosure is conclusive proof
that the incorporators satisfied all conditions precedent to incorporation except in a proceeding by the
state to cancel or revoke the incorporation or involuntarily dissolve the corporation pursuant to chapter 37
of this title.
C. Subject to section 10-3124, if the commission determines that the requirements of chapters 24 through
42 of this title for filing have not been met, the articles of incorporation and certificate of disclosure shall
not be filed and the corporate existence terminates at the time the commission completes the
determination. If the corporate existence is terminated pursuant to this subsection, sections 10-11404, 1011405 and 10-11406 apply.
D. Within sixty days after the commission approves the filing, either of the following must occur:
1. A copy of the articles of incorporation shall be published. An affidavit evidencing the
publication may be filed with the commission.
2. The commission shall input the information regarding the approval into the database as
prescribed by section 10-130.
10-3204. Liability for noncorporate transactions
All persons purporting to act as or on behalf of a corporation with actual knowledge that no corporation
exists under chapters 24 through 40 of this title are jointly and severally liable to the extent not precluded
by section 12-2506 for all liabilities created while so acting.
10-3205. Organization of corporation
After incorporation the board of directors shall hold an organizational meeting at the call of a majority of
the directors to complete the organization of the corporation by appointing officers, adopting bylaws, and
carrying on any other business brought before the meeting.
10-3206. Bylaws
A. The board of directors of a corporation shall adopt initial bylaws for the corporation.
B. The bylaws of a corporation may contain any provision for regulating and managing the affairs of the
corporation that is not inconsistent with law or the articles of incorporation.
10-3207. Emergency Bylaws
A. Unless the articles of incorporation provide otherwise, the board of directors of a corporation may
adopt bylaws to be effective only in an emergency defined in subsection D of this section. The emergency
bylaws are subject to amendment or repeal by the members and may make all provisions necessary for
managing the corporation during the emergency, including all of the following:
1. Procedures for calling a meeting of the board of directors.
2. Quorum requirements for the meeting.
3. Designation of additional or substitute directors.
B. All provisions of the regular bylaws consistent with the emergency bylaws remain effective during the
emergency. The emergency bylaws are not effective after the emergency ends.
C. Corporate action taken in good faith in accordance with the emergency bylaws both:
1. Binds the corporation.
2. May not be used to impose liability on a corporate director, officer, employee or agent.
D. An emergency exists for purposes of this section if a quorum of the corporation's directors cannot
readily be assembled because of a local emergency, a state of emergency or a state of war emergency,
all as defined in section 26-301.

Title 10, Chapter
CORPORATIONS

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26

PURPOSES

AND

POWERS-NONPROFIT

Page 292

Article 1 General Provisions
10-3301. Purposes
Subject to any limitations or requirements contained in its articles of incorporation or in any other
applicable law, a corporation shall have the purpose of engaging in and may engage in any lawful activity
including the practice of medicine as defined in section 32-1401 or the practice of dentistry as described
in section 32-1202, or both, provided that the corporation engages in the practice of medicine or dentistry
only through individuals licensed to practice in this state. This section does not alter any law or change
any liability that might otherwise be applicable to the relationship between persons furnishing a
professional service and persons receiving a professional service, including liability arising from that
relationship.
10-3302. General powers
Unless its articles of incorporation provide otherwise, every corporation has perpetual duration and
succession in its corporate name and has the same powers as an individual to do all things necessary or
convenient to carry out its affairs including power to:
1. Sue and be sued, complain and defend in its corporate name.
2. Have a corporate seal, which may be altered at will, and to use it, or a facsimile of it, by
impressing or affixing or in any other manner reproducing it.
3. Make and amend bylaws, not inconsistent with its articles of incorporation or with the laws of
this state, for regulating and managing the affairs of the corporation.
4. Purchase, receive, lease or otherwise acquire and own, hold, improve, use and otherwise deal
with real or personal property or any interest in property wherever located.
5. Sell, convey, mortgage, pledge, lease, exchange and otherwise dispose of all or any part of its
property.
6. Purchase, receive, subscribe for or otherwise acquire, own, hold, vote, use, sell, mortgage,
lend, pledge or otherwise dispose of and deal with shares or other interests in or obligations of
any entity.
7. Make contracts and guarantees, incur liabilities, borrow monies, issue its notes, bonds and
other obligations, which may be convertible into or include the option to purchase other securities
of the corporation, and secure any of its obligations by mortgage, deed of trust, security
agreement, pledge or other encumbrance of any of its property, franchises or income.
8. Issue any bond, debenture or debt security of the corporation by causing one or more officers
designated in the bylaws or by the board of directors to sign the bond, debenture or debt security
either manually or in facsimile and, if deemed necessary or appropriate by the officers, by
causing its authentication, countersignature or registration, either manually or in facsimile, by a
trustee, transfer agent or registrar other than the corporation itself or an employee of the
corporation. If an officer who has signed, either manually or in facsimile, a bond, debenture or
debt security as provided in this paragraph ceases for any reason to be an officer before the
security is issued, the corporation may issue the security with the same effect as if the officer
were still in office at the date of issue.
9. Lend monies, invest and reinvest its monies and receive and hold real and personal property
as security for repayment, except as limited by section 10-3833.
10. Be a promoter, incorporator, partner, member, associate or manager of any entity.
11. Conduct its activities, locate offices and exercise the powers granted by chapters 24 through
40 of this title within or without this state.
12. Elect or appoint directors, officers, employees and agents of the corporation, define their
duties, fix their compensation and lend them monies and credit.
13. Pay pensions and establish pension plans, pension trusts and other benefit or incentive plans
for any of its or its affiliates' current or former directors, officers, employees and agents.
14. Eliminate or limit the liability of its directors in the manner and to the extent provided by
section 10-3202 and chapter 31, article 5 of this title.
15. Make payments or donations not inconsistent with law for the public welfare or for charitable,
religious, scientific or educational purposes and for other purposes that further the corporate
interest.

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16. Impose dues, assessments, admission and transfer fees on its members.
17. Establish conditions for admission of members, admit members and issue memberships.
18. Carry on a business.
19. Transact any lawful activity that will aid governmental policy.
20. Do any other act not inconsistent with law that furthers the activities and affairs of the
corporation.
10-3303. Emergency powers
A. In anticipation of or during an emergency as prescribed in subsection D of this section, the board of
directors of a corporation may:
1. Modify lines of succession to accommodate the incapacity of any director, officer, employee or
agent.
2. Relocate the principal office, designate alternative principal offices or regional offices or
authorize the officers to do so.
B. During an emergency as prescribed in subsection D of this section, unless emergency bylaws provide
otherwise:
1. Notice of a meeting of the board of directors need be given only to those directors whom it is
practicable to reach and may be given in any practicable manner, including by publication and
radio.
2. One or more officers of the corporation present at a meeting of the board of directors may be
deemed to be directors for the meeting, in order of rank and within the same rank in order of
seniority, as necessary to achieve a quorum.
C. Corporate action taken in good faith during an emergency under this section to further the ordinary
affairs of the corporation:
1. Binds the corporation.
2. May not be used to impose liability on a corporate director, officer, employee or agent.
D. An emergency exists for purposes of this section if a quorum of the corporation's directors cannot
readily be assembled because of a local emergency, a state of emergency or a state of war emergency
all as defined in section 26-301.
10-3304. Validity of actions
A. Except as provided in subsection B of this section, the validity of corporate action shall not be
challenged on the ground that the corporation lacks or lacked power to act.
B. A corporation's power to act may be challenged by any of the following:
1. In a proceeding by members of a corporation that is not a condominium association as defined
in section 33-1202, or a planned community association as defined in section 33-1802, having at
least ten per cent or more of the voting power or by at least fifty members, unless a lesser
percentage or number is provided in the articles of incorporation, against the corporation to enjoin
the act.
2. In a proceeding by any member of a condominium or a planned community association against
the corporation to enjoin the act pursuant to title 12, chapter 10, article 1.
3. In a proceeding by the corporation, directly, derivatively or through any receiver, trustee or
other legal representative, against an incumbent or former director, officer, employee or agent of
the corporation.
C. In a member's proceeding under subsection B, paragraph 1 of this section to enjoin an unauthorized
corporate act, the court may enjoin or set aside the act, if equitable and if all affected persons are parties
to the proceeding, and may award damages for loss, other than anticipated profits, suffered by the
corporation or another party because of enjoining the unauthorized act.

Title 10, Chapter 27 NAME-NONPROFIT CORPORATIONS
Article 1 General Provisions

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10-3401. Corporate name
A. A corporate name shall not contain language that states or implies that the corporation is organized for
a purpose other than the purpose permitted by section 10-3301 and in its articles of incorporation.
B. Except as authorized by subsection C of this section, a corporate name must be distinguishable from
all of the following:
1. The corporate name of a corporation incorporated in this state or a foreign corporation
authorized to conduct affairs in this state.
2. A corporate name reserved under section 10-402 or 10-3402 or registered under section 10403 or 10-3403.
3. A fictitious name of a foreign corporation under section 10-1506 or 10-11506.
4. The corporate name of a business corporation incorporated under this title or a foreign
business corporation authorized to transact business in this state.
5. The partnership name of a limited partnership organized and registered under the laws of this
state or of a foreign limited partnership authorized to transact business in this state.
6. The name of a limited liability company organized under title 29, chapter 4 or a foreign limited
liability company authorized to transact business in this state.
7. A trade name registered pursuant to title 44, chapter 10, article 3.1.
8. The name of a registered limited liability partnership registered under title 29, chapter 5, article
10 or a foreign registered limited liability partnership authorized to transact business in this state.
C. A corporation may apply to the commission for authorization to use a name that is not distinguishable
from one or more of the names described in subsection B of this section. The commission shall authorize
use of the name applied for if either:
1. The other corporation consents to the use in writing and submits an undertaking in a form
satisfactory to the commission to change its name to a name that is distinguishable from the
name of the applying corporation.
2. The applicant delivers to the commission a certified copy of a final judgment of a court of
competent jurisdiction establishing the applicant's right to use the name applied for in this state.
D. A corporation may use the name, including a fictitious name, of another domestic or foreign business
or nonprofit corporation that is used in this state if the other corporation is incorporated or authorized to
transact business or conduct affairs in this state and the proposed user corporation either has:
1. Merged with the other corporation.
2. Been formed by reorganization of the other corporation.
3. Acquired all or substantially all of the assets, including the corporate name, of the other
corporation.
E. Chapters 24 through 42 of this title do not control the use of fictitious names.
10-3402. Reserved name
A. A person may reserve the exclusive use of a corporate name, including a fictitious name to be adopted
by a foreign corporation under section 10-11506, by delivering an application to the commission for filing.
The application shall be executed by the applicant or an authorized agent of the applicant and shall set
forth the name and address of the applicant and the name proposed to be reserved. If the commission
finds that the corporate name applied for is available, it shall reserve the name for the applicant's
exclusive use for a nonrenewable one hundred twenty day period.
B. The owner of a reserved corporate name may transfer the reservation to another person by delivering
to the commission a notice of the transfer that shall be executed by the applicant or an authorized agent
of the applicant and that states the name and address of the transferee. The transfer shall not extend the
period for which the name is reserved.
10-3403. Registered name
A. A foreign corporation may register its corporate name, or its corporate name with any change required
by section 10-11506, if the name is distinguishable from the corporate names that are not available under
section 10-3401, subsection B.
B. A foreign corporation registers its corporate name or its corporate name with any change required by
section 10-11506, by delivering to the commission an application both:
1. Setting forth its corporate name or its corporate name with any change required by section 1011506, the state or country and date of its incorporation and a brief description of the nature of
the activities in which it is engaged.
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2. Accompanied by a certificate of existence or a similar document from the state or country of
incorporation that has been issued within sixty days of delivering the application for filing with the
commission.
C. The name is registered for the applicant's exclusive use on the effective date of the application. The
registration expires one year after the effective date of the application unless it is renewed pursuant to
subsection D of this section.
D. A foreign corporation whose registration is effective may renew it for successive years by delivering to
the commission for filing a renewal application that complies with the requirements of subsection B of this
section. The renewal application renews the registration for one year after the effective date of the
renewal application.
E. A foreign corporation whose registration is effective may qualify as a foreign corporation under the
registered name or consent in writing to the use of that name by a corporation thereafter incorporated
under chapters 24 through 42 of this title or by another foreign corporation authorized to conduct affairs
in this state. The registration terminates when the domestic corporation is incorporated or the foreign
corporation qualifies or consents to the qualification of another foreign corporation under the registered
name.

Title
10,
Chapter
CORPORATIONS

28

OFFICE

AND

AGENT-NONPROFIT

Article 1 Place of Business and Agent
10-3501. Known place of business and statutory agent
Each corporation shall continuously maintain in this state both:
1. A known place of business that may be the address of its statutory agent.
2. A statutory agent who may be either:
(a) An individual who resides in this state.
(b) A domestic business or nonprofit corporation formed under this title.
(c) A foreign business or nonprofit corporation authorized to transact business or conduct
affairs in this state.
(d) A limited liability company formed under title 29.
(e) A limited liability company authorized to transact business in this state.
10-3502. Change of known place of business and statutory agent
A. A corporation may change its known place of business or statutory agent by delivering to the
commission for filing a statement of change that may be the annual report and that sets forth:
1. The name of the corporation.
2. If the current known place of business is to be changed, the street address of the new known
place of business.
3. If the current statutory agent is to be changed, the name and street address of the new
statutory agent and the new agent's written consent to the appointment.
B. The statement of change shall be executed by the corporation by an officer and delivered to the
commission. The change or changes set forth in the statement of change are effective on delivery to the
commission for filing.
C. If the statutory agent changes its street address, it shall give written notice to the corporation of the
change and sign, either manually or by fax, and deliver to the commission for filing a statement that
complies with the requirements of subsection A of this section and that recites that the corporation has
been given written notice of the change. The change or changes set forth in the statement are effective
on delivery to the commission for filing.
10-3503. Resignation of statutory agent
A. A statutory agent may resign its agency appointment by signing and delivering to the commission for
filing the signed original statement of resignation. The statement may include a statement that the known
place of business is also discontinued. The statutory agent shall give written notice of its resignation to
the corporation at an address other than the statutory agent's address.
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B. After filing the statement, the commission shall mail one copy to the corporation at its known place of
business, if not discontinued, and another copy to the corporation at its principal office.
C. The agency appointment is terminated and, if so provided in the statement, the known place of
business is discontinued on the thirty-first day after the date on which the statement was delivered to the
commission for filing.
10-3504. Service on corporation
A. The statutory agent appointed by a corporation is an agent of the corporation on whom process, notice
or demand that is required or permitted by law to be served on the corporation may be served and that,
when so served, is lawful personal service on the corporation.
B. If a corporation fails to appoint or maintain a statutory agent at the address shown on the records of
the commission, the commission is an agent of the corporation on whom any process, notice or demand
may be served. Pursuant to the Arizona rules of civil procedure, service on the commission of any
process, notice or demand for an entity that is registered pursuant to this title shall be made by delivering
to and leaving with the commission duplicate copies of the process, notice or demand, and the
commission shall immediately cause one of the copies of the process, notice or demand to be forwarded
by mail, addressed to the corporation at its known place of business. Service made on the commission is
returnable pursuant to applicable law relative to personal service on the corporation. If service is made
on the commission, whether under this chapter or a rule of court, the corporation has thirty days to
respond in addition to the time otherwise provided by law.
C. The commission shall keep a permanent record of all processes, notices and demands served on it
under this section and shall record in the record the time of the service and its action with reference to the
service.
D. Notice required to be served on a corporation pursuant to section 10-11421 or 10-11422 may be
served:
1. By mail addressed to the statutory agent of the corporation or, if the corporation fails to appoint
and maintain a statutory agent, addressed to the known place of business required to be
maintained pursuant to section 10-3501.
2. By electronic transmission to the statutory agent or to the corporation, or both.
3. Pursuant to the rules for service of process authorized by the Arizona rules of civil procedure.

Title 10, Chapter 29 MEMBERS AND MEMBERSHIP-NONPROFIT
CORPORATIONS
Article 1 Admission of Members
10-3601. Admission
A. The articles of incorporation or bylaws may establish criteria or procedures for admission of members
and continuation of membership.
B. No person shall be admitted as a member without that person's consent. Consent may be express or
implied.
10-3602. Consideration
Except as provided in its articles of incorporation or bylaws, a corporation may admit members for no
consideration or for such consideration as is determined by the board.
10-3603. No requirement of members
A corporation is not required to have members.

Article 2 Types of Memberships-Members’ Rights and Obligations
10-3610. Difference in rights and obligations of members
All members have the same rights and obligations with respect to voting, dissolution, redemption and
transfer, unless the articles of incorporation or bylaws establish classes of membership with different
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rights or obligations or otherwise provide. All members have the same rights and obligations with respect
to any other matters, except as set forth in or authorized by the articles of incorporation or bylaws.
10-3611. Transfers
A. Except as set forth in or authorized by the articles of incorporation or bylaws, no member of a
corporation may transfer a membership or any right arising from that membership.
B. If transfer rights are provided, no restriction on them is binding with respect to a member holding a
membership issued prior to the adoption of the restriction unless the restriction is approved by the
members and the affected member.
10-3612. Member’s liability to third parties
A member of a corporation is not personally liable for the acts, debts, liabilities or obligations of the
corporation.
10-3613. Member’s liability for dues, assessments and fees
A. A member may become liable to the corporation for dues, assessments and fees. A provision of the
articles of incorporation, a provision of the bylaws or a resolution adopted by the board authorizing or
imposing dues, assessments or fees does not, of itself, create liability for dues, assessments or fees. An
express or implied agreement, consent or acquiescence by the member is necessary to create liability for
dues, assessments or fees. A member is deemed to have agreed to the liability if there exists at the time
the member becomes a member a provision of the articles of incorporation, a provision of the bylaws, a
provision of the declaration of a condominium or a planned community or a resolution adopted by the
board authorizing or imposing dues, assessments or fees.
B. A home buyer may implicitly consent to liability for dues, assessments and fees.
C. Unless the provision authorizing dues expressly limits the amount of the dues, the amount and the
member's liability are subject to increase or decrease.
10-3614. Creditor’s action against member
A. No creditor of the corporation may bring a proceeding to reach the liability of a member to the
corporation unless final judgment has been rendered in favor of the creditor against the corporation, and
execution has been returned unsatisfied in whole or in part.
B. All creditors of the corporation, with or without reducing their claims to judgment, may intervene in any
creditor's proceeding brought under subsection A to reach and apply unpaid amounts due the
corporation. Any or all members who owe amounts to the corporation may be joined in that proceeding.
C. In any proceeding by a creditor under this section, the member shall pay any amount that is
determined to be owed by the member to the corporation directly to the corporation and not to any
creditor. The member is not liable directly or indirectly for any costs incurred by the creditor in the
proceeding. If the member has paid the amount to the corporation, the liability of the member to the
corporation for that amount is fully satisfied, the member is no longer a party to the proceeding and is
immune from further proceedings under this section for the amount.

Article. 3 Resignation and Termination
10-3620. Resignation
A. A member may resign at any time, except as set forth in or authorized by the articles of incorporation
or bylaws.
B. The resignation of a member does not relieve the member from any obligations the member may have
to the corporation as a result of obligations incurred or commitments made prior to resignation.
C. This section does not apply to corporations that are condominium associations or planned community
associations.
10-3621. Termination, expulsion and suspension
A. No member of a corporation may be expelled or suspended, and no membership or memberships in
such a corporation may be terminated or suspended, except pursuant to a procedure that is set forth in

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the articles of incorporation, bylaws or an agreement between the member and the corporation or a
procedure that is otherwise appropriate.
B. For purposes of subsection A, a procedure is otherwise appropriate if either:
1. The following are provided:
(a) A written notice at least fifteen days before the expulsion, suspension or termination
and the reasons therefor.
(b) An opportunity for the member to be heard, orally or in writing, at least five days
before the effective date of the expulsion, suspension or termination by a person or
persons authorized to decide that the proposed expulsion, termination or suspension
should not take place.
2. It is fair and reasonable taking into consideration all of the relevant facts and circumstances.
C. Any written notice that is mailed shall be sent to the last address of the member shown on the
corporation's records.
D. Any proceeding challenging an expulsion, suspension or termination, including a proceeding in which
defective notice is alleged, shall begin within six months after the effective date of the expulsion,
suspension or termination.
E. A member who has been expelled or suspended may be liable to the corporation for dues,
assessments or fees as a result of obligations incurred or commitments made prior to expulsion or
suspension.
F. This section does not apply to corporations organized primarily for religious purposes.
10-3622. Purchase of memberships
Except as provided in the articles of incorporation or bylaws, a corporation may purchase the membership
of a member who resigns or whose membership is terminated for the amount and pursuant to the
conditions set forth in or authorized by its articles of incorporation or bylaws. A corporation shall not make
a payment that violates section 10-11301 or 10-11302.

Article 4 Derivative Suits
10-3630. Definitions
In this article, unless the context otherwise requires:
1. "Derivative proceeding" means a civil suit in the right of a domestic corporation or, to the extent
provided in section 10-3637, in the right of a foreign corporation.
2. "Independent person" means a person with no personal interest in the transaction and no
personal or other relationship which influences the person.
10-3631. Standing
A. A proceeding may be brought in the right of a domestic corporation to procure a judgment in its favor
by either:
1. In the case of a corporation that has members, any member or members having twenty-five
per cent or more of the voting power or by fifty members, whichever is less.
2. In the case of a corporation that does not have members, any director or twenty-five per cent of
the directors, whichever is greater.
B. In any such proceeding, each complainant shall both:
1. Have been a member or director, as applicable, of the corporation at the time of the act or
omission complained of.
2. Fairly and adequately represent the interests of the corporation in enforcing the right of the
corporation.
10-3632. Demand
No complainant may commence a derivative proceeding until both:
1. A written demand has been made on the corporation to take suitable action.
2. Ninety days have expired from the date the demand was made unless the complainant has
earlier been notified that the demand has been rejected by the corporation or unless the statute of

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limitations will expire within the ninety days or unless irreparable injury to the corporation would
result by waiting for the expiration of the ninety day period.
10-3633. Stay of proceedings
If the corporation commences an inquiry into the allegations made in the demand or complaint, the court
may stay any derivative proceeding for such period as the court deems appropriate.
10-3634. Dismissal
A. A derivative proceeding shall be dismissed by the court on motion by the corporation on any legal
grounds, including if one of the groups specified in subsections B or F has determined in good faith after
conducting a reasonable inquiry on which its conclusions are based that the maintenance of the
derivative proceeding is not in the best interests of the corporation.
B. Unless a panel is appointed pursuant to subsection F, the determination in subsection A shall be made
by either:
1. A majority vote of independent directors present at a meeting of the board of directors if the
independent directors constitute a quorum.
2. A majority vote of a committee consisting of two or more independent directors appointed by
majority vote of independent directors present at a meeting of the board of directors, whether or
not such independent directors constitute a quorum.
C. None of the following shall by itself or collectively cause a director to be considered not independent
for purposes of this section:
1. The nomination or election of the director by persons who are defendants in the derivative
proceeding or against whom action is demanded.
2. The naming of the director as a defendant in the derivative proceeding or as a person against
whom action is demanded.
3. The approval by the director of the act being challenged in the derivative proceeding or
demand if the act resulted in no personal benefit to the director.
D. If a derivative proceeding is commenced after a determination has been made that rejects a demand
by the complainants, the complaint shall allege with particularity facts that establish either:
1. That a majority of the board of directors did not consist of independent directors at the time the
determination was made.
2. That the requirements of subsection A have not been met.
E. If a majority of the board of directors does not consist of independent directors at the time the
determination is made, the corporation has the burden of proving that the requirements of subsection A
have been met. If a majority of the board of directors consists of independent directors at the time the
determination is made, the plaintiff has the burden of proving by clear and convincing evidence that the
requirements of subsection A have not been met.
F. The court may appoint a panel of one or more independent persons on motion by the corporation to
determine whether the maintenance of the derivative proceeding is in the best interests of the
corporation. In that case, the plaintiff has the burden of proving by clear and convincing evidence that the
requirements of subsection A have not been met. A person appointed by the court is not liable for a
determination made pursuant to this section.
10-3635. Discontinuance or settlement
No derivative proceeding may be discontinued or settled without the court's approval. If the court
determines that a proposed discontinuance or settlement will substantially affect the interests of the
corporation's members or a class of members, the court shall direct that notice be given to the affected
members.
10-3636. Payment of expenses
On termination of the derivative proceeding the court may either:
1. Order the corporation to pay the plaintiff's reasonable expenses, including attorney fees,
incurred in the proceeding if it finds that the proceeding has resulted in a substantial benefit to the
corporation.

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2. Order the plaintiff to pay any defendant's reasonable expenses, including attorney fees,
incurred in defending the proceeding if it finds that the proceeding was commenced or maintained
without reasonable cause or for an improper purpose.
3. Order a party to pay an opposing party's reasonable expenses, including attorney fees,
incurred because of the filing of any pleading, motion or other paper, if it finds that the pleading,
motion or other paper was not well grounded in fact, after reasonable inquiry, or warranted by
existing law or a good faith argument for the extension, modification or reversal of existing law
and was interposed for an improper purpose, including to harass or to cause unnecessary delay
or needless increase in the cost of litigation.

10-3637. Applicability to foreign corporations
In any derivative proceeding in the right of a foreign corporation, the matters covered by this article are
governed by the laws of the jurisdiction of incorporation of the foreign corporation except for sections 103633, 10-3635 and 10-3636.

Article 5 Delegates
10-3640. Delegates
A. A corporation may provide in its articles of incorporation or bylaws for delegates that have some or all
of the authority of members.
B. The articles of incorporation or bylaws may set forth provisions relating to:
1. The characteristics, qualifications, rights, limitations and obligations of delegates including the
delegates' selection and removal.
2. Calling, noticing, holding and conducting meetings of delegates.
3. Carrying on corporate activities during and between meetings of delegates.

Title 10, Chapter 30 MEMBERS' MEETINGS AND VOTING-NONPROFIT
CORPORATIONS
Article 1 Meetings and Action Without Meetings
10-3701. Annual and regular meetings; exceptions
A. Unless otherwise provided in the articles of incorporation or bylaws, a corporation with members shall
hold a membership meeting annually at a time stated in or fixed in accordance with the bylaws.
B. A corporation with members may hold regular membership meetings at the times stated in or fixed in
accordance with the bylaws.
C. A corporation may hold annual and regular membership meetings in or out of this state at the place
stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the
bylaws, the corporation shall hold annual and regular meetings at the corporation's principal office.
D. At regular meetings the members shall consider and act on any matter raised and that is consistent
with the notice requirements of section 10-3705.
E. The failure to hold an annual or regular meeting at a time stated in or fixed in accordance with a
corporation's bylaws does not affect the validity of any corporate action.
F. Notwithstanding this chapter, a condominium association shall comply with title 33, chapter 9 and a
planned community association shall comply with title 33, chapter 16 to the extent that this chapter is
inconsistent with title 33, chapters 9 and 16.
10-3702. Special meeting
A. A corporation with members shall hold a special meeting of members either:
1. On the call of its board or of the person or persons authorized to do so by the articles or
bylaws.
2. Except as provided in the articles of incorporation or bylaws of a corporation organized
primarily for religious purposes, if the holders of at least ten per cent of the voting power of any
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corporation sign, date and deliver to any corporate officer one or more written demands for the
meeting describing the purpose or purposes for which it is to be held.
B. The close of business on the thirtieth day before delivery of the demand or demands for a special
meeting to any corporate officer is the record date for the purpose of determining whether the ten per cent
requirement of subsection A of this section has been met.
C. A corporation may hold a special meeting of members in or out of this state at the place stated in or
fixed in accordance with the bylaws. If no place is stated or fixed in accordance with the bylaws, the
corporation shall hold special meetings at the corporation's principal office.
D. Unless otherwise provided in the articles of incorporation or bylaws, the corporation may conduct only
those matters at a special meeting of members that are within the purpose or purposes described in the
meeting notice required by section 10-3705.
10-3703. Court ordered meeting; costs; attorney fees
A. The court in the county where a corporation's principal office is located, or if the corporation has no
principal office in this state, the court in the county where the corporation's known place of business is
located, may summarily order a meeting to be held on application by any of the following:
1. Any member, if an annual meeting was not held within fifteen months after its last annual
meeting.
2. Any member, if a regular meeting is not held within forty days after the date it was required to
be held.
3. A member who signed a demand for a special meeting that is valid under section 10-3702 or a
person or persons entitled to call a special meeting, if either:
(a) Notice of the special meeting was not given within thirty days after the date that the
demand was delivered to a corporate officer.
(b) The special meeting was not held in accordance with the notice.
B. The court may:
1. Fix the time and place of the meeting.
2. Specify a record date for determining members entitled to notice of and to vote at the meeting.
3. Prescribe the form and content of the meeting notice.
C. If the court orders a meeting, it may also order the corporation to pay the member's costs, including
reasonable attorney fees, incurred to obtain the order.
10-3704. Action by written consent; definition
A. The members may approve any action that is required or permitted by chapters 24 through 40 of this
title and that requires the members' approval without a meeting of members if the action is approved by
members holding at least a majority of the voting power, unless the articles of incorporation, bylaws or
chapters 24 through 40 of this title require a different amount of voting power. The action shall be
evidenced by one or more written consents describing the action taken, signed by those members
representing at least the requisite amount of the voting power, and delivered to the corporation for
inclusion in the minutes or filing with the corporate records.
B. If not otherwise fixed under section 10-3703 or 10-3707, the record date for determining members
entitled to take action without a meeting is the date the first member signs the consent under subsection
A of this section.
C. The consent signed under this section has the effect of a meeting vote and may be described as such
in any document.
D. Written notice of member approval pursuant to this section shall be given to all members who have not
signed the written consent.
E. Unless otherwise specified in the consent or consents, the action is effective on the date that the
consent or consents are signed by the last member whose signature results in the requisite amount of the
voting power, except that if chapters 24 through 40 of this title require notice of proposed actions to
members who are not entitled to vote in the action and the action is to be taken by unanimous consent of
the members entitled to vote, the effective date is not before ten days after the corporation gives its
members not entitled to vote written notice of the proposed action. The notice shall contain or be
accompanied by the same material that under chapters 24 through 40 of this title would have been sent to
members not entitled to vote in a notice of meeting at which the proposed action would have been
submitted to the members for action.
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F. Any member may revoke the member's consent by delivering a signed revocation of the consent to the
president or secretary before the date that the consent or consents are signed by the last member whose
signature results in the requisite amount of the voting power.
G. For the purposes of this section, "signature" includes an electronic signature as defined in section 447002.
10-3705. Notice of meeting
A. Except as provided in section 33-2208, a corporation shall notify members of the date, time and place
of each annual, regular and special members' meeting at least ten days but not more than sixty days
before the meeting date. Unless chapters 24 through 40 of this title or the articles of incorporation or
bylaws require otherwise, the corporation shall give notice only to members entitled to vote at the
meeting.
B. Unless chapters 24 through 40 of this title or the articles of incorporation or bylaws require otherwise,
the notice of an annual or regular meeting does not require a description of the purpose or purposes for
which the meeting is called.
C. Notice of a special meeting shall include a description of the purpose or purposes for which the
meeting is called.
D. If not otherwise fixed under section 10-3703 or 10-3707, the record date for determining members
entitled to notice of and to vote at an annual, regular or special members' meeting is the day before the
effective date of the first notice to the members.
E. Unless the bylaws require otherwise, if an annual, regular or special members' meeting is adjourned to
a different date, time or place, a notice of the new date, time or place is not required if the new date, time
or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting
is or must be fixed under section 10-3707, the corporation shall give notice of the adjourned meeting
pursuant to this section to persons who are members as of the new record date.
10-3706. Waiver of notice
A. A member may waive any notice required by chapters 24 through 40 of this title, the articles of
incorporation or bylaws before or after the date and time stated in the notice. The waiver shall be in
writing, be signed by the member entitled to the notice, and be delivered to the corporation for inclusion in
the minutes or filing with the corporate records.
B. A member's attendance at a meeting:
1. Waives objection to lack of notice or defective notice of the meeting, unless the member at the
beginning of the meeting objects to holding the meeting or transacting business at the meeting.
2. Waives objection to consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice, unless the member objects to considering
the matter at the time it is presented.
10-3707. Record date; determining members entitled to notice and vote
A. The bylaws of a corporation may fix or provide the manner of fixing a date as the record date for
determining the members entitled to notice of a members' meeting. If the bylaws do not fix or provide for
fixing that record date, the board may fix a future date as that record date. If that record date is not fixed,
members at the close of business on the business day before the day on which notice is given, or if notice
is waived, at the close of business on the business day before the day on which the meeting is held, are
entitled to notice of the meeting.
B. The bylaws of a corporation may fix or provide the manner of fixing a date as the record date for
determining the members entitled to vote at a members' meeting. If the bylaws do not fix or provide for
fixing that record date, the board may fix a future date as that record date. If that record date is not fixed,
members on the date of the meeting who are otherwise eligible to vote are entitled to vote at the meeting.
C. The bylaws may fix or provide the manner for determining a date as the record date for the purpose of
determining the members entitled to exercise any rights in respect of any other lawful action. If the bylaws
do not fix or provide for fixing that record date, the board may fix in advance that record date. If that
record date is not fixed, members at the close of business on the day on which the board adopts the
resolution relating to that record date, or the sixtieth day before the date of other action, whichever is
later, are entitled to exercise those rights.

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D. The record date fixed under this section shall not be more than seventy days before the meeting or
action requiring a determination of members.
E. A determination of members entitled to notice of or to vote at a membership meeting is effective for
any adjournment of the meeting, unless the board fixed a new date for determining the right to notice or
the right to vote. The board shall fix a new date for determining the right to notice or the right to vote if the
meeting is adjourned to a date that is more than seventy days after the record date for determining
members entitled to notice of the original meeting.
F. If a court orders a meeting adjourned to another date, the original record date for notice of voting
continues in effect.
10-3708. Action by written ballot
A. Unless prohibited or limited by the articles of incorporation or bylaws, any action that the corporation
may take at any annual, regular or special meeting of members may be taken without a meeting if the
corporation delivers a written ballot to every member entitled to vote on the matter.
B. A written ballot shall:
1. Set forth each proposed action.
2. Provide an opportunity to vote for or against each proposed action.
C. Approval by written ballot pursuant to this section is valid only if both:
1. The number of votes cast by ballot equals or exceeds the quorum required to be present at a
meeting authorizing the action.
2. The number of approvals equals or exceeds the number of votes that would be required to
approve the matter at a meeting at which the total number of votes cast was the same as the
number of votes cast by ballot.
D. All solicitations for votes by written ballot shall:
1. Indicate the number of responses needed to meet the quorum requirements.
2. State the percentage of approvals necessary to approve each matter other than election of
directors.
3. Specify the time by which a ballot must be delivered to the corporation in order to be counted,
which time shall not be less than three days after the date that the corporation delivers the ballot.
E. Except as otherwise provided in the articles of incorporation or bylaws, a written ballot shall not be
revoked.
F. After providing notice that complies with subsection G of this section to members that a vote shall be
conducted by electronic means, a written ballot may be delivered through an online voting system that
does all of the following:
1. Authenticates the member's identity.
2. Authenticates the validity of each electronic vote to ensure that the vote is not altered in transit.
3. Transmits a receipt to each member who casts an electronic vote.
4. Stores electronic votes for recount, inspection and review purposes.
G. The notice prescribed by subsection F of this section shall include a reasonable procedure by which a
member may obtain and cast a ballot through some other form of delivery, including United States mail
delivery and fax transmission.

Article 2 Voting
10-3720. Members’ list for meeting
A. After fixing a record date for a meeting, a corporation shall prepare an alphabetical list of the names of
all of its members who are entitled to notice of the meeting. The list shall show the address and number
of votes each member is entitled to vote at the meeting. The corporation shall prepare on a current basis
through the time of the membership meeting another list of members, if any, who are entitled to vote at
the meeting, but not entitled to notice of the meeting and the corporation shall prepare that list on the
same basis and make it a part of the list of members.
B. For the purpose of communication with other members concerning the meeting the corporation shall
make the list of members available for inspection by any member at the corporation's principal office or at
another place identified in the meeting notice in the city where the meeting will be held. On written
demand a member, a member's agent or a member's attorney may inspect and, subject to the limitations

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of section 10-11602, subsection C, and section 10-11605, may copy the list, during regular business
hours and at the member's expense, during the period it is available for inspection.
C. The corporation shall make the list of members available at the meeting, and any member, a member's
agent or a member's attorney may inspect the list at any time during the meeting or during any
adjournment.
D. If the corporation refuses to allow a member, a member's agent or a member's attorney to inspect the
list of members before or at the meeting or copy the list as permitted by subsection B of this section, the
court in the county where a corporation's principal office is located, or if no principal office is located in
this state, the court in the county where a corporation's known place of business is located, on application
of the member, may summarily order the inspection or copying at the corporation's expense and may
postpone the meeting for which the list was prepared until the inspection or copying is complete.
E. Refusal or failure to comply with this section does not affect the validity of any action taken at the
meeting.
F. The articles of incorporation or bylaws of a corporation organized primarily for religious purposes may
limit or abolish the rights of a member under this section to inspect and copy any corporate record.
10-3721. Voting entitlement generally
A. Unless the articles of incorporation or bylaws provide otherwise, each member is entitled to one vote
on each matter voted on by the members. A member is entitled to vote only on those matters expressly
provided in the articles of incorporation or bylaws.
B. Unless the articles of incorporation or bylaws or written agreement signed by the subject members and
delivered to the corporation provide otherwise, if a membership stands of record in the names of two or
more persons, those persons' acts with respect to voting shall have the following effect:
1. If only one votes, the act binds all.
2. If more than one votes, the vote shall be divided on a pro rata basis.
10-3722. Quorum requirements
Unless chapters 24 through 40 of this title or the articles of incorporation provide for a higher or lower
quorum the bylaws may provide the number or percentage of members entitled to vote, present or
represented by proxy, or the number or percentage of votes entitled to be cast by members present or
represented by proxy, that shall constitute a quorum at a meeting of members. In the absence of that
provision, members, present or represented by proxy, holding one-tenth of the votes entitled to be cast,
shall constitute a quorum.
10-3723. Voting requirements
Unless chapters 24 through 40 of this title provide otherwise, the articles of incorporation or the bylaws
require a greater vote or voting by class, if a quorum is present, the affirmative vote of the votes
represented and voting, for which affirmative votes also constitute a majority of the required quorum, is
the act of the members.
10-3724. Proxies
A. A member may vote the member's votes in person or by proxy.
B. Unless the articles of incorporation or bylaws prohibit or limit proxy voting, a member may appoint a
proxy to vote or otherwise act for the member by signing an appointment form, either personally or by the
member's attorney-in-fact.
C. An appointment of a proxy is effective on receipt by the secretary or other officer or agent authorized to
tabulate votes. An appointment is valid for eleven months unless a different period is expressly provided
in the appointment form.
D. An appointment of a proxy is revocable by the member unless the appointment form conspicuously
states that it is irrevocable and the appointment is coupled with an interest. Appointments coupled with an
interest include the appointment of any of the following:
1. A pledgee.
2. A person who purchased, agreed to purchase, holds an option to purchase or holds any other
right to acquire the membership interest.
3. A creditor of the corporation who extended or continued credit to the corporation under terms
requiring the appointment.
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4. An employee of the corporation whose employment contract requires the appointment.
5. A party to a voting agreement created pursuant to section 10-3731.
E. The death or incapacity of the member who appoints a proxy does not affect the right of the
corporation to accept the proxy's authority unless the secretary or other officer or agent authorized to
tabulate votes receives written notice of the death or incapacity before the proxy exercises authority
under the appointment.
F. Appointment of a proxy is revoked by the person who appoints the proxy by either:
1. Attending any meeting and voting in person.
2. Signing and delivering to the secretary or other officer or agent authorized to tabulate proxy
votes either a writing stating that the appointment of the proxy is revoked or a subsequent
appointment form.
G. An appointment made irrevocable under subsection D of this section is revoked if the interest with
which it is coupled is extinguished.
H. A transferee for value of a membership interest subject to an irrevocable appointment may revoke the
appointment if the transferee did not know of its existence at the time that the transferee acquired the
membership interest and the existence of the irrevocable appointment was not noted conspicuously on
the transfer documents.
I. Subject to section 10-3727 and to any express limitation on the proxy's authority that appears on the
face of the appointment form, a corporation may accept the proxy's vote or other action as that of the
member making the appointment.
10-3725. Cumulative voting for directors
A. If the articles of incorporation or bylaws provide for cumulative voting by members, members may
cumulate their votes for directors, by multiplying the number of votes the members are entitled to cast by
the number of directors for whom they are entitled to vote and casting the product for a single candidate
or by distributing the product among two or more candidates.
B. Cumulative voting is not authorized at a particular meeting unless either:
1. The meeting notice or statement accompanying the notice states conspicuously that
cumulative voting is authorized.
2. A member who has the right to cumulate votes gives notice during the meeting and before the
vote is taken of the member's intent to cumulate votes during the meeting, and if one member
gives this notice all other members in the same voting group participating in the election are
entitled to cumulate their votes without giving further notice.
C. A director elected by cumulative voting may be removed by the members without cause if the
requirements of section 10-3808 are met unless the votes cast against removal, or those members not
consenting in writing or by ballot to the removal, would be sufficient to elect that director if voted
cumulatively at an election at which the same total number of votes were cast or, if the action is taken by
written consent or ballot, all memberships entitled to vote were voted and the entire number of directors
authorized at the time of the director's most recent election were then being elected.
10-3726. Other methods of electing directors
A corporation may provide in its articles of incorporation or bylaws the process for election of directors by
members or delegates by any of the following means:
1. On the basis of chapter or other organizational unit.
2. By region or other geographic unit.
3. By preferential voting.
4. By any other reasonable method.
10-3727. Corporation’s acceptance of votes
A. If the name signed on a vote, consent, waiver or proxy appointment corresponds to the name of a
member, the corporation if acting in good faith is entitled to accept the vote, consent, waiver or proxy
appointment and give it effect as the act of the member.
B. If the name signed on a vote, consent, waiver or proxy appointment does not correspond to the record
name of a member, the corporation if acting in good faith is entitled to accept the vote, consent, waiver or
proxy appointment and give it effect as the act of the member if:

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1. The member is an entity and the name signed purports to be that of an officer or agent of the
entity.
2. The name signed purports to be that of an administrator, executor, guardian or conservator
representing the member and, if the corporation requests, evidence of fiduciary status acceptable
to the corporation has been presented with respect to the vote, consent, waiver or proxy
appointment.
3. The name signed purports to be that of a receiver or trustee in bankruptcy of the member, and,
if the corporation requests, evidence of this status acceptable to the corporation has been
presented with respect to the vote, consent, waiver or proxy appointment.
4. The name signed purports to be that of a pledgee, beneficial owner or attorney-in-fact of the
member and, if the corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the member has been presented with respect to the vote, consent,
waiver or proxy appointment.
5. Two or more persons hold the membership as cotenants or fiduciaries and the name signed
purports to be the name of at least one of the coholders and the person signing appears to be
acting on behalf of all the coholders.
C. The corporation is entitled to reject a vote, consent, waiver or proxy appointment if the secretary or
other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt
about the validity of the signature on it or about the signatory's authority to sign for the member.
D. The corporation and its officer or agent who accepts or rejects a vote, consent, waiver or proxy
appointment in good faith and in accordance with the standards of this section are not liable in damages
to the member for the consequences of the acceptance or rejection.
E. Corporate action based on the acceptance or rejection of a vote, consent, waiver or proxy appointment
under this section is valid unless a court of competent jurisdiction determines otherwise.

Article 3 Voting Agreements of Trusts
10-3730. Voting trusts
If and to the extent a membership is transferable as provided in section 10-3611, and unless otherwise
provided in the articles of incorporation or bylaws, one or more members may create a voting trust,
conferring on one or more trustees the right to vote or otherwise act for them, by signing an agreement
setting out the provisions of the trust and transferring their memberships to the trustee or trustees. The
agreement may contain any lawful provision not inconsistent with the purposes of the trust.
10-3731. Voting agreements
A. Two or more members may provide for the manner in which they will vote by signing an agreement for
that purpose.
B. Unless otherwise provided in the voting agreement, a voting agreement created under this section is
specifically enforceable.
10-3732. Member agreements
A. An agreement among the members of a corporation that complies with this section is effective among
the members and the corporation even though it is inconsistent with one or more other provisions of
chapters 24 through 40 of this title if it meets any of the following conditions:
1. Restricts the discretion or powers of the board of directors.
2. Governs the authorization or making of distributions whether or not in proportion to ownership
of memberships, subject to the limitations in sections 10-11301 and 10-11302.
3. Establishes who shall be directors or officers of the corporation, their terms and conditions of
office or employment or their manner of selection or removal.
4. Governs, in general or in regard to specific matters, the exercise or division of voting power by
or between the members and directors or by or among any of them, including use of weighted
voting rights or director proxies.
5. Establishes the terms and conditions of any agreement for the transfer or use of property or the
provision of services between the corporation and any member, director, officer or employee of
the corporation or among any of them.

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6. Transfers to one or more members or other persons all or part of the authority to exercise the
corporate powers or to manage the affairs of the corporation, including the resolution of any issue
about which there exists a deadlock among directors or members.
7. Requires dissolution of the corporation at the request of one or more of the members or on the
occurrence of a specified event or contingency.
8. Establishes the terms and conditions of employment of members.
9. Addresses the use of arbitration or other forms of dispute resolution to resolve disputes among
members.
10. Restricts the transfer of memberships.
11. Otherwise governs the exercise of the corporate powers or the management of the affairs of
the corporation, its liquidation and dissolution or the relationship among the members, the
directors and the corporation, or among any of them.
B. An agreement authorized by this section shall be:
1. Set forth either:
(a) In the articles of incorporation or bylaws and approved by all persons who are
members at the time of the agreement.
(b) In a written agreement that is signed by all persons who are members at the time of
the agreement and that is filed with the corporation.
2. Subject to amendment or termination only by all persons who are members at the time of the
amendment, unless the agreement provides otherwise.
3. Valid for the duration of the corporation's existence, unless the agreement provides otherwise.
C. An agreement authorized by this section is enforceable by any party to the agreement against any
other party to the agreement. The existence of an agreement authorized by this section shall be noted
conspicuously in an information statement provided to any person who becomes a member and who was
not a signatory of the agreement. The failure to note the existence of the agreement in the information
statement does not affect the validity of the agreement or any action taken pursuant to it. Any transferee
of a membership who at the time of transfer did not have knowledge of the existence of the agreement is
entitled to rescission of the membership. A transferee shall be deemed to have knowledge of the
existence of the agreement if its existence is noted in the information statement in compliance with this
subsection and the information is delivered to the transferee at or before the time of transfer of the
membership or the transferee has actual notice of the existence of the agreement at the time of transfer.
An action to enforce the right of rescission authorized by this subsection must be commenced within the
earlier of ninety days after discovery of the existence of the agreement or two years after the time of the
transfer of the membership.
D. If the agreement ceases to be effective for any reason, the board of directors, if the agreement is
contained or referred to in the corporation's articles of incorporation or bylaws, may adopt an amendment
to the articles of incorporation or bylaws, without shareholder action, to delete the agreement and any
references to it.
E. An agreement that is authorized by this section and that limits the discretion or powers of the board of
directors relieves the directors of and imposes on the person or persons in whom such discretion or
powers are vested liability for acts or omissions imposed by law on directors to the extent that the
discretion or powers of the directors are limited by the agreement.
F. The existence or performance of an agreement authorized by this section is not a ground for imposing
personal liability on any member for the acts or debts of the corporation even if the agreement or its
performance treats the corporation as if it were an unincorporated association or results in failure to
observe the corporate formalities otherwise applicable to the matters governed by the agreement.
G. Incorporators may act as members with respect to an agreement authorized by this section if no
members have been admitted when the agreement is made.
H. This section does not apply to, limit or invalidate agreements that are otherwise valid or authorized
without regard to this section, including without limitation member agreements between or among some
or all of the members or agreements between or among the corporation and one or more members. The
procedure set forth in this section is not the exclusive method of agreement among members or among
members and the corporation with respect to any of the matters described in this section.

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Title 10, Chapter 31 DIRECTORS AND OFFICERS-NONPROFIT
CORPORATIONS
Article 1 Board of Directors
10-3801. Requirement for and duties of board
A. Each corporation shall have a board of directors.
B. All corporate powers shall be exercised by or under the authority of and the affairs of the corporation
shall be managed under the direction of its board of directors, subject to any limitation set forth in the
articles of incorporation.
C. The articles of incorporation may authorize one or more members, delegates or other persons to
exercise some or all of the powers which would otherwise be exercised by a board. To the extent so
authorized the authorized person or persons shall have the duties and responsibilities of the directors,
and the directors shall be relieved to that extent from those duties and responsibilities.
10-3802. Qualifications of directors
The articles of incorporation or bylaws may prescribe qualifications for directors. A director need not be a
resident of this state or a member of the corporation unless the articles of incorporation or bylaws so
prescribe.
10-3803. Number of directors
A. A board of directors shall consist of one or more individuals, with the number specified in or fixed in
accordance with the articles of incorporation or bylaws.
B. The articles of incorporation or bylaws may establish a variable range for the size of the board of
directors by fixing a minimum and maximum number of directors. If a variable range is established, the
number of directors may be fixed or changed, from time to time, within the minimum and maximum, by the
members or the board of directors.
10-3804. Election, designation and appointment of directors
A. If the corporation has members, the members shall elect all the directors except the initial directors at
the first annual meeting of members, and at each annual meeting after the first annual meeting, unless
either:
1. The terms of the directors are staggered pursuant to section 10-3806.
2. The articles of incorporation or bylaws provide some other time or method of election.
3. The articles of incorporation or bylaws provide that some of the directors are appointed by
some other person or some of the directors are designated.
B. If the corporation does not have members, all the directors except the initial directors shall be elected,
appointed or designated as provided in the articles of incorporation or bylaws. If no method of designation
or appointment is set forth in the articles of incorporation or bylaws, the board of directors shall elect the
directors other than the initial directors.

10-3805. Terms of directors generally
A. The terms of the initial directors of a corporation expire at the first election, appointment or designation
of directors as provided in section 10-3804.
B. The articles of incorporation or bylaws shall specify the terms of directors. In the absence of any term
specified in the articles of incorporation or bylaws, the term of each director is one year. Unless otherwise
provided in the articles of incorporation or bylaws, directors may be elected for successive terms.
C. A decrease in the number of directors or term of office does not shorten the term of any incumbent
director.
D. Except as provided in the articles of incorporation or bylaws:
1. The term of a director elected to fill a vacancy in the office of a director elected by members
expires at the next election of directors by members.

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2. The term of a director elected to fill any other vacancy expires at the end of the unexpired term
that the director is filling.
E. Despite the expiration of a director's term, a director shall continue to hold office until the director's
successor is elected, designated or appointed and qualifies, until the director's resignation or removal or
until there is a decrease in the number of directors.
10-3806. Staggered terms for directors
The articles of incorporation or bylaws may provide for staggering the directors' terms of office by dividing
the total number of directors into two or more groups. The terms of office of the several groups need not
be uniform.
10-3807. Resignation of directors
A. A director may resign at any time by delivering written notice to the board of directors, its presiding
officer or the corporation.
B. A resignation is effective when the notice is delivered unless the notice specifies a later effective date
or event. If a resignation is made effective at a later date, the board may fill the pending vacancy before
the effective date if the board provides that the successor does not take office until the effective date.

10-3808. Removal of directors elected by members or directors
A. A director may be removed from office pursuant to any procedure provided in the articles of
incorporation or bylaws.
B. If the articles of incorporation or bylaws do not provide a procedure for removal of a director from
office:
1. The members may remove one or more directors elected by them with or without cause unless
the articles of incorporation provide that directors may be removed only for cause.
2. If a director is elected by a class, chapter, region or other organizational or geographic unit or
grouping only the members of that class, chapter, region, unit or grouping may participate in the
vote to remove the director.
3. Except as provided in paragraph 9, a director may be removed under paragraph 1 or 2 only if
the number of votes cast to remove the director would be sufficient to elect the director at a
meeting to elect directors.
4. If cumulative voting is authorized, a director may not be removed if the number of votes, or if
the director was elected by a class, chapter, region, unit or grouping of members, the number of
votes of that class, chapter, region, unit or grouping, sufficient to elect the director under
cumulative voting is voted against the director's removal.
5. A director elected by members may be removed by the members at a meeting by written
consent or by written ballot of the members authorized to vote on such removal. If the removal is
to occur at a meeting, the meeting notice shall state that the purpose or one of the purposes of
the meeting is removal of the director.
6. In computing whether a director is protected from removal under paragraphs 2 through 4, it is
assumed that the votes against removal are cast in an election for the number of directors of the
class to which the director to be removed belonged on the date of that director's election.
7. An entire board of directors may be removed under paragraphs 1 through 5.
8. Except as provided in subsection C, a director elected by the board may be removed with or
without cause by the vote of two-thirds of the directors then in office or any greater number as is
set forth in the articles of incorporation or bylaws.
9. If, at the beginning of a director's term on the board of directors, the articles of incorporation or
bylaws provide that the director may be removed for missing a specified number of meetings of
the board of directors, the board of directors may remove the director for failing to attend the
specified number of meetings. The director may be removed only if a majority of the directors
then in office vote for the removal.
C. Notwithstanding subsection B, paragraph 8, a director elected by the board to fill the vacancy of a
director elected by the members may be removed with or without cause by the members, but not by the
board of directors.

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10-3809. Removal of designated or appointed directors
A. A designated director may be removed by an amendment to the articles of incorporation or bylaws
deleting or changing the designation.
B. Except as otherwise provided in the articles of incorporation or bylaws, an appointed director may be
removed with or without cause by the person appointing the director. The person removing the director
shall give written notice of the removal to the director and either the board of directors, its presiding officer
or the corporation. A removal is effective when the notice is delivered unless the notice specifies a later
effective date or event.
10-3810. Removal of directors by judicial proceeding
A. The court in the county where a corporation's known place of business or, if none in this state, its
statutory agent is located may remove a director of the corporation from office in a proceeding
commenced either by the corporation or by its members holding at least twenty-five per cent of the voting
power of any class, if the court finds that both:
1. The director engaged in fraudulent conduct or intentional criminal conduct with respect to the
corporation.
2. Removal is in the best interests of the corporation.
B. The court that removes a director may bar the director from serving on the board for a period
prescribed by the court, but in no event may the period exceed five years.
C. If members commence a proceeding under subsection A, they shall make the corporation a party
defendant, unless the corporation elects to become a party plaintiff.
D. The articles of incorporation or bylaws of a corporation organized for religious purposes may limit or
prohibit the application of this section.

10-3811. Vacancy on board
A. Unless the articles of incorporation or bylaws provide otherwise, and except as provided in subsections
B and C of this section, if a vacancy occurs on a board of directors, including a vacancy resulting from an
increase in the number of directors, either:
1. The members, if any, may fill the vacancy.
2. The board of directors may fill the vacancy.
3. If the directors remaining in office constitute fewer than a quorum of the board of directors, they
may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.
B. Unless the articles of incorporation or bylaws provide otherwise, if the vacant office was held by a
director elected by a class, chapter, region or other organizational or geographic unit or grouping, only
members of the class, chapter, region, unit or grouping are entitled to vote to fill the vacancy if it is filled
by the members.
C. Unless the articles of incorporation or bylaws provide otherwise, if a vacant office was held by an
appointed director, only the person who appointed the director may fill the vacancy.
D. If a vacant office was held by a designated director, the vacancy shall be filled as provided in the
articles of incorporation or bylaws. In the absence of an applicable article or bylaw provision, the vacancy
may not be filled by the board.
E. A vacancy that will occur at a specific later date by reason of a resignation effective at a later date
under section 10-3807, subsection B or otherwise may be filled before the vacancy occurs, but the new
director may not take office until the vacancy occurs.
F. If at any time by reason of death or resignation or other cause a corporation has no directors in office,
any officer or any member may call a special meeting of members.
10-3812. Compensation of directors
Unless the articles of incorporation or bylaws provide otherwise, the board of directors may fix the
compensation of directors.

Article 2 Meetings and Action of the Board

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10-3820. Regular and special meetings
A. If the time and place of a directors' meeting is fixed by the bylaws or the board of directors, the meeting
is a regular meeting. All other meetings are special meetings.
B. A board of directors may hold regular or special meetings in or out of this state.
C. Unless the articles of incorporation or bylaws provide otherwise, the board of directors may permit any
or all directors to participate in a regular or special meeting by or conduct the meeting through the use of
any means of communication by which all directors participating may simultaneously hear each other
during the meeting. A director participating in a meeting by this means is deemed to be present in person
at the meeting.
10-3821. Action without meeting
A. Unless the articles of incorporation or bylaws provide otherwise, action required or permitted by
chapters 24 through 40 of this title to be taken at a directors' meeting may be taken without a meeting if
the action is taken by all of the directors. The action must be evidenced by one or more written consents
describing the action taken, signed by each director and included in the minutes filed with the corporate
records reflecting the action taken.
B. Action taken under this section is effective when the last director signs the consent, unless the consent
specifies a different effective date.
C. The consent signed under this section has the effect of a meeting vote and may be described as such
in any document.
D. Any director may revoke a consent by delivering a signed revocation of the consent to the president or
secretary before the date the last director signs the consent.
E. For the purposes of this section, a consent may be signed using an electronic signature as defined in
section 44-7002.
10-3822. Call and notice of meetings
A. Unless the articles of incorporation, bylaws or subsection C of this section provide otherwise, regular
meetings of the board of directors may be held without notice of the date, time, place or purpose of the
meeting.
B. Unless the articles of incorporation, bylaws or subsection C of this section provide otherwise, special
meetings of the board of directors shall be preceded by at least two days' notice of the date, time and
place of the meeting. The notice need not describe the purpose of the special meeting unless required by
the articles of incorporation or bylaws.
C. In corporations without members any board action to remove a director or to approve a matter that
would require approval by the members if the corporation had members is not valid unless each director
is given at least two days' written notice that the matter will be voted on at a directors' meeting or unless
notice is waived pursuant to section 10-3823.
D. Unless the articles of incorporation or bylaws provide otherwise, the presiding officer of the board of
directors, the president or twenty per cent of the directors then in office may call and give notice of a
meeting of the board.
10-3823. Waiver of notice
A. A director may waive any notice required by chapters 24 through 40 of this title, the articles of
incorporation or bylaws before or after the date and time stated in the notice. Except as provided in
subsection B of this section, the waiver shall be in writing and signed by the director entitled to the notice,
or by electronic transmission, and filed with the minutes or corporate records.
B. A director's attendance at or participation in a meeting waives any required notice to the director of the
meeting unless the director at the beginning of the meeting or promptly on the director's arrival at the
meeting objects to holding the meeting or transacting business at the meeting and does not thereafter
vote for or assent to action taken at the meeting.
C. For the purposes of this section, a waiver may be signed using an electronic signature as defined in
section 44-7002.
10-3824. Quorum and voting
A. Unless the articles of incorporation or bylaws require a different number, a quorum of a board of
directors consists of either:
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1. A majority of the fixed number of directors if the corporation has a fixed board size.
2. A majority of the number of directors prescribed, or if no number is prescribed, the number in
office immediately before the meeting begins, if the corporation has a variable range size board.
B. The articles of incorporation or bylaws may authorize a quorum of a board of directors to consist of at
least one-third of the fixed or prescribed number of directors determined under subsection A.
C. The articles of incorporation or bylaws may specify that, if a quorum is present when a meeting is
convened, the quorum shall be deemed to exist until the meeting is adjourned, notwithstanding the
departure of one or more directors.
D. If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the
act of the board of directors unless the articles of incorporation or bylaws require the vote of a greater
number of directors.
E. A director who is present at a meeting of the board of directors or a committee of the board of directors
when corporate action is taken is deemed to have assented to the action taken unless either:
1. The director objects at the beginning of the meeting or promptly on the director's arrival to
holding it or transacting business at the meeting.
2. The director's dissent or abstention from the action taken is entered in the minutes of the
meeting.
3. The director delivers written notice of the director's dissent or abstention to the presiding officer
of the meeting before its adjournment or to the corporation before 5:00 p.m. on the next business
day after the meeting.
F. The right of dissent or abstention is not available to a director who votes in favor of the action taken.
G. The articles of incorporation or bylaws may authorize a director to vote in person or by proxy. The
following provisions apply to voting by proxy:
1. A director may appoint a proxy to vote or otherwise act for the director by signing an
appointment form, either personally or by the director's attorney-in-fact. The appointment does
not relieve the director of liability for acts or omissions imposed by law on directors.
2. An appointment of a proxy is effective when received by the secretary. An appointment is valid
for one month unless a different period is expressly provided in the appointment form.
3. An appointment of a proxy is revocable by the director.
4. The death or incapacity of the director appointing a proxy does not affect the right of the
corporation to accept the proxy's authority unless written notice of the death or incapacity is
received by the secretary before the proxy exercises its authority under the appointment.
5. Subject to any express limitation on the proxy's authority appearing on the face of the
appointment form, a corporation is entitled to accept the proxy's vote or other action as of the
shareholder making the appointment.
10-3825. Committees of the board
A. Unless the articles of incorporation or bylaws provide otherwise, the board of directors may create one
or more committees and appoint members of the board of directors to serve on them. Each committee
shall have one or more members, and each member of a committee shall serve at the pleasure of the
board of directors.
B. The creation of a committee and appointment of members of the board of directors to it must be
approved by the greater of:
1. A majority of all the directors in office when the action is taken.
2. The number of directors required by the articles of incorporation or bylaws to take action under
section 10-3824.
C. Sections 10-3820 through 10-3824 governing meetings, action without meetings and notice, waiver of
notice, quorum and voting requirements of the board of directors also apply to committees and their
members.
D. Subject to the limitations set forth in subsection E of this section, each committee of the board may
exercise the authority of the board of directors under section 10-3801 to the extent specified by the board
of directors or in the articles of incorporation or bylaws.
E. A committee shall not take any of the following actions:
1. Authorize distributions.
2. Approve or recommend to members any action that requires the members' approval under this
chapter.
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3. Fill vacancies on the board of directors or on any of its committees.
4. Adopt, amend or repeal bylaws.
5. Fix the compensation of directors for serving on the board of directors or any committee of the
board of directors.
F. The creation of, delegation of authority to or action by a committee does not alone constitute
compliance by a director with the standards of conduct described in section 10-3830.
G. The board of directors may designate one or more directors as alternate members of any committee
who may replace any absent member at any meeting of the committee.

Article 3 Standards of Conduct
10-3830. General standards for directors
A. A director's duties, including duties as a member of a committee, shall be discharged:
1. In good faith.
2. With the care an ordinarily prudent person in a like position would exercise under similar
circumstances.
3. In a manner the director reasonably believes to be in the best interests of the corporation.
B. In discharging duties, a director is entitled to rely on information, opinions, reports or statements,
including financial statements and other financial data, if prepared or presented by any of the following:
1. One or more officers or employees of the corporation whom the director reasonably believes
are reliable and competent in the matters presented.
2. Legal counsel, public accountants or other person as to matters the director reasonably
believes are within the person's professional or expert competence.
3. A committee of or appointed by the board of directors of which the director is not a member if
the director reasonably believes the committee merits confidence.
4. In the case of corporations organized for religious purposes, religious authorities and ministers,
priests, rabbis or other persons whose position or duties in the religious organization the director
believes justify reliance and confidence and whom the director believes to be reliable and
competent in the matters presented.
C. A director is not acting in good faith if the director has knowledge concerning the matter in question
that makes reliance otherwise permitted by subsection B unwarranted.
D. A director is not liable for any action taken as a director or any failure to take any action if the director's
duties were performed in compliance with this section. In any proceeding commenced under this section
or any other provision of this chapter, a director has all of the defenses and presumptions ordinarily
available to a director. A director is presumed in all cases to have acted, failed to act or otherwise
discharged such director's duties in accordance with subsection A. The burden is on the party challenging
a director's action, failure to act or other discharge of duties to establish by clear and convincing evidence
facts rebutting the presumption.
E. A director shall not be deemed to be a trustee with respect to the corporation or with respect to any
property held or administered by the corporation, including property that may be subject to restrictions
imposed by the donor or transferor of that property.
10-3833. Liability for unlawful distributions
A. A director who votes for or assents to a distribution made in violation of sections 10-11301 and 1011302 or the articles of incorporation is personally liable to the corporation for the amount of the
distribution that exceeds what could have been distributed without violating sections 10-11301 and 1011302 or the articles of incorporation if it is established that the director's duties were not performed in
compliance with section 10-3830.
B. A director of a corporation who is present at a meeting of its board of directors at which action on any
distribution in violation of section 10-11301 is taken is presumed to have assented to the action taken
unless his dissent is entered in the minutes of the meeting or unless he files his written dissent to the
action with the secretary of the meeting before the adjournment of the meeting or forwards the dissent by
registered or certified mail to the secretary of the corporation before 5:00 p.m. of the next business day
after the adjournment of the meeting. The right to dissent does not apply to a director who voted in favor
of the action.

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C. A director who is held liable under subsection A of this section for an unlawful distribution is entitled to
contribution from:
1. Every other director who could be held liable under subsection A of this section for the unlawful
distribution.
2. Each person who received an unlawful distribution for the amount of the distribution whether or
not the person receiving the distribution knew it was made in violation of sections 10-11301 and
10-11302 or the articles of incorporation.
D. A proceeding under this section is barred unless it is commenced within two years after the date on
which the distribution is made.

Article 4 Officers
10-3840. Officers
A. A corporation shall have the officers described in its articles of incorporation or bylaws or appointed by
the board of directors in accordance with the articles of incorporation or bylaws.
B. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the
bylaws or the board of directors.
C. The bylaws or the board of directors shall delegate to one of the officers responsibility for preparing
minutes of the directors' and members' meetings and for authenticating records of the corporation.
D. The same individual may simultaneously hold more than one office in a corporation.
10-3841. Duties and authority of officers
Each officer has the authority and shall perform the duties set forth in the bylaws or, to the extent
consistent with the bylaws, the duties and authority prescribed by the board of directors or by direction of
an officer authorized by the board of directors to prescribe the duties and authority of other officers.
10-3842. Standards of conduct for officers
A. If an officer has discretionary authority with respect to any duties, an officer's duties shall be
discharged under that authority:
1. In good faith.
2. With the care an ordinarily prudent person in a like position would exercise under similar
circumstances.
3. In a manner the officer reasonably believes to be in the best interests of the corporation.
B. In discharging duties, an officer is entitled to rely on information, opinions, reports or statements,
including financial statements and other financial data, if prepared or presented by either:
1. One or more officers or employees of the corporation whom the officer reasonably believes to
be reliable and competent in the matters presented.
2. Legal counsel, public accountants or other persons as to matters the officer reasonably
believes are within the person's professional or expert competence.
3. In the case of corporations organized for religious purposes, religious authorities and ministers,
priests, rabbis or other persons whose position or duties in the religious organization the officer
believes justify reliance and confidence and who the officer believes to be reliable and competent
in the matters presented.
C. An officer is not acting in good faith if the officer has knowledge concerning the matter in question that
makes reliance otherwise permitted by subsection B unwarranted.
D. An officer is not liable for any action taken as an officer or any failure to take any action if the officer's
duties were performed in compliance with this section. In any proceeding commenced under this section
or any other provision of this chapter, an officer has all of the defenses and presumptions ordinarily
available to an officer. An officer is presumed in all cases to have acted, failed to act or otherwise
discharged such officer's duties in accordance with subsection A. The burden is on the party challenging
an officer's action, failure to act or other discharge of duties to establish by clear and convincing evidence
facts rebutting the presumption.

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10-3843. Resignation and removal of officers
A. An officer may resign at any time by delivering notice to the corporation. A resignation is effective when
the notice is delivered unless the notice specifies a later effective date or event. If a resignation is made
effective at a later date or event and the corporation accepts the later effective date, its board of directors
may fill the pending vacancy before the effective date if the board of directors provides that the successor
does not take office until the effective date.
B. A board of directors may remove any officer at any time with or without cause.
10-3844. Contract rights of officers
A. The appointment of an officer does not itself create contract rights.
B. An officer's removal does not affect the officer's contract rights, if any, with the corporation. An officer's
resignation does not affect the corporation's contract rights, if any, with the officer.
10-3845. Officers’ authority to execute documents
Any contract or other instrument in writing executed or entered into between a corporation and any other
person is not invalidated as to the corporation by any lack of authority of the signing officers in the
absence of actual knowledge on the part of the other person that the signing officers had no authority to
execute the contract or other instrument if it is signed by two individuals who are either:
1. Both the presiding officer of the board of directors and the president.
2. Either the presiding officer of the board of directors or the president, and one of the following:
(a) A vice-president.
(b) The secretary.
(c) The treasurer.
(d) The executive director.

Article 5 Indemnification
10-3850. Definitions
In this article, unless the context otherwise requires:
1. "Corporation" includes any domestic or foreign predecessor entity of a corporation in a merger
or other transaction in which the predecessor's existence ceased upon consummation of the
transaction.
2. "Director" means an individual who is or was a director of a corporation or an individual who,
while a director of a corporation, is or was serving at the corporation's request as a director,
officer, partner, trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan or other entity. A director is considered to
be serving an employee benefit plan at the corporation's request if the director's duties to the
corporation also impose duties on or otherwise involve services by the director to the plan or to
participants in or beneficiaries of the plan. Director includes the estate or personal representative
of a director and includes ex officio members of the board.
3. "Expenses" include attorney fees and other costs and expenses reasonably related to a
proceeding.
4. "Liability" means the obligation to pay a judgment, settlement, penalty or fine, including an
excise tax assessed with respect to an employee benefit plan, or reasonable expenses actually
incurred with respect to a proceeding and includes obligations and expenses that have not yet
been paid by the indemnified persons but that have been or may be incurred.
5. "Officer" means an individual who is or was an officer of a corporation or an individual who,
while an officer of a corporation, is or was serving at the corporation's request as a director,
officer, partner, trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan or other entity. An officer is considered to
be serving an employee benefit plan at the corporation's request if the officer's duties to the
corporation also impose duties on or otherwise involve services by the officer to the plan or to
participants in or beneficiaries of the plan. Officer includes the estate or personal representative
of an officer.

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6. "Official capacity" means if used with respect to a director, the office of director in a corporation
and, if used with respect to an officer as contemplated in section 10-3856, the office in a
corporation held by the officer. Official capacity does not include service for any other foreign or
domestic corporation or any partnership, joint venture, trust, employee benefit plan, or other
entity.
7. "Outside director" means a director who, when serving as a director, is not or was not a
compensated officer, employee or member holding more than ten per cent of the voting power of
the corporation or any affiliate of the corporation or an officer, employee or holder of more than
ten per cent of the voting power of such a member or any affiliate of that member.
8. "Party" includes an individual who was, is or is threatened to be made a named defendant or
respondent in a proceeding.
9. "Proceeding" means any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative and whether formal or informal.
10-3851. Authority to indemnify
A. Except as provided in subsection D of this section, a corporation may indemnify an individual made a
party to a proceeding because either:
1. The individual is or was a director against liability incurred in the proceeding if all of the
following conditions exist:
(a) The individual's conduct was in good faith.
(b) The individual reasonably believed:
(i) In the case of conduct in an official capacity with the corporation, that the
conduct was in its best interests.
(ii) In all other cases, that the conduct was at least not opposed to its best
interests.
(c) In the case of any criminal proceedings, the individual had no reasonable cause to
believe the conduct was unlawful.
2. The director engaged in conduct for which broader indemnification has been made permissible
or obligatory under a provision of the articles of incorporation pursuant to section 10-3202,
subsection B, paragraph 2.
B. A director's conduct with respect to an employee benefit plan for a purpose the director reasonably
believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies
the requirement of subsection A, paragraph 1, subdivision (a) of this section.
C. The termination of a proceeding by judgment, order, settlement or conviction or on a plea of no contest
or its equivalent is not of itself determinative that the director did not meet the standard of conduct
described in this section.
D. A corporation may not indemnify a director under this section either:
1. In connection with a proceeding by or in the right of the corporation in which the director was
adjudged liable to the corporation.
2. In connection with any other proceeding charging improper personal benefit to the director,
whether or not involving action in the director's official capacity, in which the director was
adjudged liable on the basis that personal benefit was improperly received by the director.
E. Indemnification permitted under this section in connection with a proceeding by or in the right of the
corporation is limited to reasonable expenses incurred in connection with the proceeding.
10-3852. Mandatory indemnification
A. Unless limited by its articles of incorporation, a corporation shall indemnify a director who was the
prevailing party, on the merits or otherwise, in the defense of any proceeding to which the director was a
party because the director is or was a director of the corporation against reasonable expenses incurred
by the director in connection with the proceeding.
B. Unless limited by its articles of incorporation, section 10-851, subsection D or subsection C of this
section, a corporation shall indemnify an outside director against liability. Unless limited by its articles of
incorporation or subsection C of this section, a corporation shall pay an outside director's expenses in
advance of a final disposition of a proceeding, if the director furnishes the corporation with a written
affirmation of the director's good faith belief that the director has met the standard of conduct described in
section 10-851, subsection A and the director furnishes the corporation with a written undertaking
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executed personally, or on the director's behalf, to repay the advance if it is ultimately determined that the
director did not meet the standard of conduct. The undertaking required by this subsection is an unlimited
general obligation of the director but need not be secured and shall be accepted without reference to the
director's financial ability to make repayment.
C. A corporation shall not provide the indemnification or advancement of expenses described in
subsection B of this section if a court of competent jurisdiction has determined before payment that the
outside director failed to meet the standards described in section 10-851, subsection A, and a court of
competent jurisdiction does not otherwise authorize payment under section 10-854. A corporation shall
not delay payment of indemnification or expenses under subsection B of this section for more than sixty
days after a request is made unless ordered to do so by a court of competent jurisdiction.
10-3853. Advance for expenses
A. A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party
to a proceeding in advance of final disposition of the proceeding if both of the following conditions exist:
1. The director furnishes to the corporation a written affirmation of the director's good faith belief
that the director has met the standard of conduct described in section 10-3851 or that the
proceeding involves conduct for which liability has been eliminated under a provision of the
articles of incorporation pursuant to section 10-3202, subsection B, paragraph 1.
2. The director furnishes the corporation with a written undertaking, executed personally or on the
director's behalf, to repay the advance if the director is not entitled to mandatory indemnification
under section 10-3852 and it is ultimately determined that the director did not meet the standard
of conduct.
B. The undertaking required by subsection A, paragraph 2 of this section is an unlimited general
obligation of the director but need not be secured and may be accepted without reference to financial
ability to make repayment.
C. Authorizations of payments under this section shall be made in a manner consistent with section 103830 or 10-3842.
D. This section does not apply to advancement of expenses to or for the benefit of an outside director.
Advances to outside directors shall be made pursuant to section 10-3852.
10-3854. Court ordered indemnification
Unless a corporation's articles of incorporation provide otherwise, a director of the corporation who is a
party to a proceeding may apply for indemnification or an advance for expenses to the court conducting
the proceeding or to another court of competent jurisdiction. On receipt of an application, the court after
giving any notice the court considers necessary may order indemnification advances for expenses if it
determines either:
1. The director is entitled to mandatory indemnification under section 10-3852, in which case the
court shall also order the corporation to pay the director's reasonable expenses incurred to obtain
court ordered indemnification.
2. The director is fairly and reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not the director met the standard of conduct set forth in section 103851 or was adjudged liable as described in section 10-3851, subsection D, but if the director
was adjudged liable under section 10-3851, subsection D, indemnification is limited to reasonable
expenses incurred.
10-3855. Determination and authorization of indemnification
A. A corporation may not indemnify a director under section 10-3851 unless authorized in the specific
case after a determination has been made that indemnification of the director is permissible in the
circumstances because the director has met the standard of conduct set forth in section 10-3851.
B. The determination shall be made either:
1. By the board of directors by a majority vote of the directors not at the time parties to the
proceeding.
2. By special legal counsel:
(a) Selected by majority vote of the disinterested directors.
(b) If there are no disinterested directors, selected by majority vote of the board of
directors.
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3. By the members, but directors who are at the time parties to the proceeding may not vote on
the determination.
C. Neither special legal counsel nor any member has any liability whatsoever for a determination made
pursuant to this section. In voting pursuant to subsection B of this section, directors shall discharge their
duty in accordance with section 10-3830.
D. Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the
same manner as the determination that indemnification is permissible, except that if the determination is
made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of
expenses shall be made by those entitled under subsection B, paragraph 2 of this section to select
counsel.
10-3856. Indemnification of officers
A. A corporation may indemnify and advance expenses under this article to an officer of the corporation
who is a party to a proceeding because the individual is or was an officer of the corporation as follows:
1. To the same extent as a director.
2. If the individual is an officer but not a director, to the further extent as may be provided by the
articles of incorporation, the bylaws, a resolution of the board of directors, or contract except for:
(a) Liability in connection with a proceeding by or in the right of the corporation other than
for reasonable expenses incurred in connection with the proceeding.
(b) Liability arising out of conduct that constitutes:
(i) Receipt by the officer of a financial benefit to which the officer is not entitled.
(ii) An intentional infliction of harm on the corporation or the members.
(iii) An intentional violation of criminal law.
B. Subsection A, paragraph 2 of this section applies to an officer who is also director if the basis on which
the officer is made a party to the proceeding is an act or omission solely as an officer.
C. An officer of a corporation who is not a director is entitled to mandatory indemnification under section
10-3852, subsection A and may apply to a court under section 10-3854 for indemnification or an advance
for expenses, in each case to the same extent to which a director is entitled to indemnification or advance
for expenses under those sections.
10-3857. Insurance
A corporation may purchase and maintain insurance on behalf of an individual who is or was a director or
officer of the corporation or who, while a director or officer of the corporation, is or was serving at the
request of the corporation as a director, officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan or other entity, against
liability asserted against or incurred by the individual in that capacity or arising from the individual's status
as a director or officer, whether or not the corporation would have power to indemnify or advance
expenses to the person against the same liability under this article.
10-3858. Application of article
A. A provision treating a corporation's indemnification of or advance for expenses to directors that is
contained in its articles of incorporation, bylaws, a resolution of its members or board of directors or a
contract or otherwise is valid only if and to the extent the provision is consistent with this article. If the
articles of incorporation limit indemnification or advances for expenses, indemnification and advances for
expenses are valid only to the extent consistent with the articles of incorporation.
B. This article does not limit a corporation's power to pay or reimburse expenses incurred by a director in
connection with the director's appearance as a witness in a proceeding at a time when the director has
not been made a named defendant or respondent to the proceeding.
C. This article does not limit a corporation's power to indemnify, advance expenses or maintain insurance
on behalf of an employee or agent.

Article 6 Director’s Conflicting Interest Transactions
10-3860. Definitions
In this article, unless the context otherwise requires:

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1. "Conflicting interest" with respect to a corporation means the interest a director of the
corporation has respecting a transaction effected or proposed to be effected by the corporation,
by a subsidiary of the corporation or by any other entity in which the corporation has a controlling
interest if either:
(a) Whether or not the transaction is brought before the board of directors of the
corporation for action, the director knows at the time of commitment that the director or a
related person either:
(i) Is a party to the transaction.
(ii) Has a beneficial financial interest in or is so closely linked to the transaction
and of such financial significance to the director or a related person that the
interest would reasonably be expected to exert an influence on the director's
judgment if he were called on to vote on the transaction.
(b) The transaction is brought or is of such character and significance to the corporation
that it would in the normal course be brought before the board of directors of the
corporation for action, and the director knows at the time of commitment that any of the
following persons is either a party to the transaction or has a beneficial financial interest
in or is so closely linked to the transaction and of such financial significance to the person
that the interest would reasonably be expected to exert an influence on the director's
judgment if the director were called on to vote on the transaction:
(i) An entity, other than the corporation, of which the director is a director, general
partner, agent or employee.
(ii) A person that controls one or more of the entities specified in item (i) of this
subdivision or an entity that is controlled by or is under common control with one
or more of the entities specified in item (i) of this subdivision.
(iii) An individual who is a general partner, principal or employer of the director.
2. "Director's conflicting interest transaction" with respect to a corporation means a transaction
effected or proposed to be effected by the corporation, by a subsidiary of the corporation or by
any other entity in which the corporation has a controlling interest respecting which a director of
the corporation has a conflicting interest.
3. "Related person" of a director means either:
a) The spouse, or a parent or sibling of the spouse, of the director, a child, grandchild,
sibling, parent or spouse of a child, grandchild, sibling or parent, of the director, an
individual having the same home as the director or a trust or estate of which an individual
specified in this subdivision is a substantial beneficiary.
(b) A trust, estate, incompetent, conservatee or minor of which the director is a fiduciary.
4. "Required disclosure" means disclosure by the director who has a conflicting interest of both:
(a) The existence and nature of the conflicting interest.
(b) All facts known to the director respecting the subject matter of the transaction that an
ordinarily prudent person would reasonably believe to be material to a judgment about
whether or not to proceed with the transaction.
5. "Time of commitment" respecting a transaction means the time when the transaction is
consummated or, if made pursuant to contract, the time when the corporation, or its subsidiary or
the entity in which it has a controlling interest, becomes contractually obligated so that its
unilateral withdrawal from the transaction would entail significant loss, liability or other damage.
10-3861. Judicial action
A. A transaction that is effected or proposed to be effected by a corporation, or by a subsidiary of the
corporation or any other entity in which the corporation has a controlling interest, and that is not a
director's conflicting interest transaction shall not be enjoined, be set aside or give rise to an award of
damages or other sanctions in a proceeding by a member or by or in the right of the corporation, because
a director of the corporation, or any person with whom or with which the director has a personal,
economic or other association, has an interest in the transaction.
B. A director's conflicting interest transaction shall not be enjoined, be set aside or give rise to an award
of damages or other sanctions in a proceeding by a member by or in the right of the corporation, because
the director, or any person with whom or with which the director has a personal, economic or other
association, has an interest in the transaction, if either:
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1. Directors' action respecting the transaction was taken at any time in compliance with section
10-3862.
2. Members' action respecting the transaction was taken at any time in compliance with section
10-3863.
3. The transaction, judged according to the circumstances at the time of commitment, is
established to have been fair to the corporation.
C. Any person seeking to have a director's conflicting interest transaction enjoined, set aside or give rise
to an award of damages or other sanctions shall first prove by clear and convincing evidence that
subsection B of this section is not applicable.
10-3862. Directors’ action; definition
A. Directors' action respecting a transaction is effective for purposes of section 10-3861, subsection B,
paragraph 1 if the transaction received the affirmative vote of a majority, but at least two, of those
qualified directors on the board of directors or on a duly empowered committee of the board who voted on
the transaction after either required disclosure to them, to the extent the information was not known by
them, or compliance with subsection B of this section. Action by a committee is effective under this
section only if both:
1. All of its members are qualified directors.
2. Members are either all of the qualified directors on the board or are appointed by the
affirmative vote of a majority of the qualified directors or the board.
B. If a director has a conflicting interest regarding a transaction but neither the director nor a related
person of the director specified in section 10-3860, paragraph 3, subdivision (a) is a party to the
transaction and if the director has a duty under law or professional canon or a duty of confidentiality to
another person, respecting information relating to the transaction such that the director may not make the
disclosure described in section 10-3860, paragraph 4, subdivision (b), disclosure is sufficient for purposes
of subsection A of this section if the director both:
1. Discloses to the directors voting on the transaction the existence and nature of the conflicting
interest and informs them of the character and limitations imposed by that duty before their vote
on the transaction.
2. Plays no part, directly or indirectly, in their deliberations or vote.
C. A majority, but at least two, of all of the qualified directors on the board of directors or on the
committee is a quorum for purposes of action that complies with this section. Directors' action that
otherwise complies with this section is not affected by the presence or vote of a director who is not a
qualified director.
D. For purposes of this section, "qualified director" means, with respect to a director's conflicting
transaction, any director who does not have either:
1. A conflicting interest respecting the transaction.
2. A familial, financial, professional or employment relationship with a second director who does
have a conflicting interest respecting the transaction, which relationship would, in the
circumstances, reasonably be expected to exert an influence on the first director's judgment when
voting on the transaction.
10-3863. Members’ action; definition
A. Members' action respecting a transaction is effective for purposes of section 10-3861, subsection B,
paragraph 2 if a majority of the votes entitled to be cast by the holders of all qualified membership
interests was cast in favor of the transaction after all of the following:
1. Notice to members describing the director's conflicting interest transaction.
2. Provision of the information referred to in subsection C of this section.
3. Required disclosure to the members who voted on the transaction, to the extent the information
was not known by them.
B. A majority of the votes entitled to be cast by the holders of all qualified membership interests is a
quorum for the purposes of action that complies with this section. Subject to subsections C and D of this
section, members' action that otherwise complies with this section is not affected by the presence of
members or the voting of membership interests that are not qualified membership interests.
C. For purposes of compliance with subsection A of this section, a director who has a conflicting interest
respecting the transaction shall inform, before the members' vote, the secretary, or other officer or agent
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of the corporation authorized to tabulate votes, of the number and the identity of persons holding or
controlling the vote of all membership interests that the director knows are beneficially owned, or the
voting of which is controlled, by the director or by a related person of the director, or both.
D. If a member's vote does not comply with subsection A of this section solely because of a failure of a
director to comply with subsection C of this section and if the director establishes that his failure did not
determine and was not intended by him to influence the outcome of the vote, the court, with or without
further proceedings respecting section 10-3861, subsection B, paragraph 3, may take such action,
respecting the transaction and the director and give such effect, if any, to the members' vote, as it
considers appropriate in the circumstances.
E. For purposes of this section, "qualified membership interests" means any membership interests
entitled to vote with respect to the director's conflicting interest transaction except membership interests
that, to the knowledge, before the vote, of the secretary or other officer or agent of the corporation
authorized to tabulate votes, are beneficially owned, or the voting of which is controlled, by a director who
has a conflicting interest respecting the transaction or by a related person of the director, or both.
10-3864. Conflict of interest policy; exceptions
A. The board of directors of a corporation shall adopt a policy regarding transactions between the
corporation and interested persons, including the sale, lease or exchange of property to or from interested
persons and the corporation, the lending or borrowing of monies to or from interested persons by the
corporation or the payment of compensation by the corporation for services provided by interested
persons. For the purposes of this subsection, "interested person" means an officer or director of a
corporation or any other corporation, firm, association or entity in which an officer or director of a
corporation is a member, officer or director or has a financial interest.
B. The requirements of this section do not apply to any of the following:
1. A corporation that had assets at the end of its last fiscal year with a book value of less than ten
million dollars, net of accumulated depreciation, or had gross receipts or revenues of less than
two million dollars in its last fiscal year.
2. A corporation that offers goods or services only to members who are entitled to vote for its
board of directors.
3. A corporation organized for religious purposes that does not have, as a substantial portion of
its business, the offering of goods or services on a regular basis to the public for remuneration.
4. A corporation organized by or on behalf of the United States, this state, a political subdivision
of this state or an agency or instrumentality of such a governmental entity.
5. A hospital, medical, dental or optometric service corporation licensed pursuant to title 20,
chapter 4, article 3.
C. For the purposes of subsection B, paragraph 3:
1. Goods and services include medical, hospital, dental or counseling or social services offered
on a regular basis to the public for remuneration.
2. A corporation organized for religious purposes includes a corporation or foreign corporation
that controls or is controlled directly or indirectly by a corporation or foreign corporation organized
for religious purposes.
D. The exemption provided by subsection B, paragraph 4 does not apply to a corporation that provides
services to or operates assets of the governmental entity pursuant to a lease or contract.

Title 10, Chapter 33 AMENDMENT OF ARTICLES OF INCORPORATION
AND BYLAWS-NONPROFIT CORPORATIONS
Article 1 Articles of Incorporation
10-11001. Authority to amend
A. A corporation may amend its articles of incorporation at any time to add or change a provision that is
required or permitted in the articles of incorporation or to delete a provision that is not required in the
articles of incorporation. Whether a provision is required or permitted in the articles of incorporation is
determined as of the effective date of the amendment.
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B. A member of the corporation does not have a vested property right resulting from any provision in the
articles of incorporation, including provisions relating to management, control or purpose of duration of
the corporation.
10-11002. Amendment by board of directors
A. If a corporation has members who are otherwise entitled to vote on amendments to the corporation's
articles, then unless the articles of incorporation provide otherwise, a corporation's board of directors may
adopt one or more amendments to the corporation's articles without member approval to either:
1. Extend the duration of the corporation if it was incorporated at a time when limited duration was
required by law.
2. Delete the names and addresses of the initial directors.
3. Delete the name and address of the initial statutory agent or known place of business, if a
statement of change is on file with the commission.
4. Change the corporate name by substituting the word "corporation", "incorporated", "company",
"limited", "association", "society", or the abbreviation "corp.", "inc.", "co.", "ltd.", "assn." or "socy."
for a similar word or abbreviation in the name, or by adding, deleting or changing a geographical
attribution to the name.
5. Make any other change expressly permitted by chapters 24 through 40 of this title or the
articles of incorporation to be made by director action.
B. If a corporation has no members or if no members are entitled to vote on the proposed amendment,
the board of directors may adopt one or more amendments to the corporation's articles of incorporation.
C. Adoption of an amendment pursuant to this section requires the approval in writing by any person or
persons whose approval is required pursuant to section 10-11030 for an amendment to the articles of
incorporation or bylaws.
10-11003. Amendment by board of directors and members
A. The following apply to amendments to the articles of incorporation by the board of directors and the
members, if there are members entitled to vote on the amendment:
1. A corporation's board of directors may propose one or more amendments to the articles of
incorporation for submission to the members.
2. For the amendment to be adopted all of the following shall have occurred:
(a) The board of directors shall recommend the amendment to the members unless the
board of directors determines that because of conflict of interest or other special
circumstances it should make no recommendation and communicates the basis for that
determination to the members with the amendment.
(b) The members entitled to vote on the amendment shall approve the amendment as
provided by paragraph 5 of this subsection.
(c) Each person whose approval is required by the articles of incorporation as authorized
by section 10-11030 for an amendment to the articles of incorporation or bylaws shall
approve the amendment in writing.
3. The board of directors may condition its submission of the proposed amendment on any basis.
4. The corporation shall notify each member entitled to vote of the proposed members' meeting in
accordance with section 10-3705. The notice of meeting shall also state that the purpose or one
of the purposes of the meeting is to consider the proposed amendment and shall contain or be
accompanied by a copy or summary of the amendment.
5. Unless chapters 24 through 40 of this title, the articles of incorporation or the board of directors
acting pursuant to paragraph 3 of this subsection requires a greater vote or voting by class, the
amendment to be adopted shall be approved by two-thirds of the votes cast or a majority of the
voting power, whichever is less.
B. The following apply to amendments to the articles of incorporation by the members, if there are
members:
1. If the articles of incorporation expressly permit, the members may propose amendments to the
articles of incorporation. If so permitted, the articles of incorporation shall set forth procedures for
adopting member initiated amendments, including the percentage of voting power and method of
notice required to propose an amendment and the responsibility for calling a member meeting to
consider the amendment.
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2. For the amendment to be adopted, all of the following shall have occurred:
(a) The members entitled to vote on the amendment shall approve the amendment as
provided in paragraph 4 of this subsection.
(b) The corporation shall notify each member in accordance with subsection A, paragraph
4 of this section.
(c) Each person whose approval is required by the articles of incorporation as authorized
by section 10-11030 for an amendment to the articles of incorporation or bylaws shall
approve the amendment in writing.
3. The members may condition adoption of the proposed amendment on any basis.
4. Unless chapters 24 through 40 of this title, the articles of incorporation or the members acting
pursuant to paragraph 3 of this subsection require a greater vote or voting by class, the
amendment to be adopted shall be approved by two-thirds of the votes cast or a majority of the
voting power, whichever is less.
10-11004. Class voting by members on amendments
The members of a class of a corporation are entitled to vote as a class on a proposed amendment to the
articles of incorporation only if a class vote is provided for in the articles of incorporation or bylaws.
10-11006. Articles of amendment
A. A corporation amending its articles of incorporation shall deliver to the commission for filing articles of
amendment setting forth:
1. The name of the corporation.
2. The text of each amendment adopted.
3. The date of each amendment's adoption.
4. A statement that the amendment was duly adopted by act of the members or act of the board
of directors and, if applicable, with the approval required pursuant to section 10-11030.
B. Within sixty days after the commission approves the filing, either of the following must occur:
1. A copy of the articles of amendment shall be published. An affidavit evidencing the publication
may be filed with the commission.
2. The commission shall input the information regarding the approval into the database as
prescribed by section 10-130.
10-11007. Restated articles of incorporation
A. A corporation's board of directors may restate its articles of incorporation at any time with or without
approval by the members or any other person.
B. The restatement may include one or more amendments to the articles of incorporation. If the
restatement includes an amendment requiring approval by the members or any other person, it shall be
adopted as provided in section 10-11003.
C. If the board of directors submits a restatement for member action, the corporation shall notify each
member entitled to vote of the proposed membership meeting in writing in accordance with section 103705. The notice shall also state that the purpose or one of the purposes of the meeting is to consider the
proposed restatement and shall contain or be accompanied by a copy or summary of the restatement that
identifies any amendment or other change it would make in the articles.
D. If the board of directors submits a restatement for member action by written ballot or written consent,
the material that solicits the approval shall contain or be accompanied by a copy or summary of the
restatement that also identifies any amendment or other change it would make in the articles of
incorporation.
E. A corporation restating its articles of incorporation shall deliver to the commission for filing articles of
restatement setting forth the name of the corporation and the text of the restated articles of incorporation
together with a certificate setting forth:
1. Whether the restatement contains an amendment to the articles requiring approval by any
other person other than the board of directors and, if it does not, that the board of directors
adopted the restatement.
2. If the restatement contains an amendment to the articles requiring approval by the members, a
statement that such approval was obtained.
3. If the restatement contains an amendment to the articles requiring approval by a person whose
approval is required pursuant to section 10-11030, a statement that such approval was obtained.
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F. Duly adopted restated articles of incorporation supersede the original articles of incorporation and all
amendments to them.
G. The commission may certify restated articles of incorporation, as the articles of incorporation currently
in effect, without including the certificate information required by subsection E of this section.
H. Within sixty days after the commission approves the filing, either of the following must occur:
1. A copy of the articles of restatement shall be published. An affidavit evidencing the publication
may be filed with the commission.
2. The commission shall input the information regarding the approval into the database as
prescribed by section 10-130.
10-11008. Amendment pursuant to reorganization
A. A corporation's articles may be amended pursuant to this section without action by the board of
directors or members or approval required pursuant to section 10-11030 to carry out a plan of
reorganization ordered or decreed by a court of competent jurisdiction under a federal statute or a statute
of this state if the articles of incorporation after amendment contain only provisions required or permitted
by section 10-3202.
B. Before the date of entry of a final decree in the reorganization proceeding, the individual or individuals
designated by the court plan shall deliver to the commission articles of amendment setting forth all of the
following:
1. The name of the corporation.
2. The text of each amendment contained in the plan of reorganization.
3. The date of the court's order or decree confirming the plan of reorganization containing the
articles of amendment.
4. The title of the reorganization proceeding in which the order or decree was entered.
5. A statement that the court had jurisdiction of the proceeding under federal or state statute.
C. This section does not apply after entry of a final decree in the reorganization proceeding even though
the court retains jurisdiction of the proceeding for limited purposes unrelated to consummation of the
reorganization plan.
D. Within sixty days after the commission approves the filing, either of the following must occur:
1. A copy of the articles of amendment shall be published. An affidavit evidencing the publication
may be filed with the commission.
2. The commission shall input the information regarding the approval into the database as
prescribed by section 10-130.
10-11009. Effect of amendment and restatement
An amendment to the articles of incorporation does not affect a cause of action existing against or in favor
of the corporation, a proceeding to which the corporation is a party, any requirement or limitation imposed
on the corporation or any property held by it by virtue of any trust on which that property is held by the
corporation or the existing rights of persons other than members of the corporation. An amendment
changing a corporation's name does not abate a proceeding brought by or against the corporation in its
former name.

Article 2 Bylaws
10-11020. Amendment by board of directors
A. If a corporation has no members, its board of directors may adopt one or more amendments to the
corporation's bylaws.
B. The adoption of an amendment pursuant to this section shall require the approval in writing by any
person or persons whose approval is required pursuant to section 10-11030.
10-11021. Amendment by board of directors or members
If the articles of incorporation or the bylaws require that an amendment to or repeal of the corporation's
bylaws be submitted to the members, the procedures set forth in section 10-11003 shall apply.

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10-11022. Class voting by members on amendments
The members of a class of a corporation are entitled to vote as a class on a proposed amendment to the
bylaws only if a class vote is provided for in the articles of incorporation or bylaws.
10-11023. Bylaw increasing quorum or voting requirement for members
A. If authorized by the articles of incorporation, members may adopt or amend a bylaw that fixes a greater
quorum or voting requirement for members, or of classes of members, than is required by chapters 24
through 40 of this title. The adoption or amendment of a bylaw that adds, changes or deletes a greater
quorum or voting requirement for members shall meet the same quorum requirement and shall be
adopted by the same vote and classes of members required to take action under the quorum and voting
requirement then in effect or proposed to be adopted, whichever is greater.
B. A bylaw that fixes a greater quorum or voting requirement for members under subsection A shall not
be adopted, amended or repealed by the board of directors.
10-11024. Bylaw increasing quorum or voting requirement for directors
A. A bylaw that fixes a greater quorum or voting requirement for the board of directors may be amended
or repealed as follows:
1. If originally adopted by the members, only by the members.
2. If originally adopted by the board of directors, either by the members or by the board of
directors.
B. A bylaw that is adopted or amended by the members and that fixes a greater quorum or voting
requirement for the board of directors may provide that it may be amended or repealed only by a
specified vote of either the members or the board of directors.
C. Action by the board of directors under subsection A, paragraph 2 to adopt or amend a bylaw that
changes the quorum or voting requirement for the board of directors shall meet the same quorum
requirement and shall be adopted by the same vote required to take action under the quorum and voting
requirement then in effect or proposed to be adopted, whichever is greater.

Article 3 Articles of Incorporation and Bylaws
10-11030. Approval by third persons
The articles of incorporation may require a specified person or persons other than the board of directors
to approve in writing any amendment to the articles of incorporation or bylaws and, unless the articles of
incorporation or bylaws otherwise provide, that article provision may only be amended with the approval
in writing of the specified person or persons.
10-11031. Amendment terminating members or redeeming or canceling memberships
A. Any amendment to the articles of incorporation or bylaws of a corporation that terminates all members
or any class of members or redeems or cancels all memberships or any class of memberships shall be
adopted in accordance with section 10-11002, 10-11003, 10-11020 or 10-11021, as applicable, and this
section.
B. The members shall approve any amendment described in subsection A of this section by two-thirds of
the votes cast by each class.
C. The provisions of section 10-3621 do not apply to any amendment described in subsection A of this
section.

Title 10, Chapter 34 MERGERS AND OTHER RESTRUCTURING
TRANSACTIONS-NONPROFIT CORPORATIONS
Article 1 General Provisions
10-11101. Definitions
A. In this article, unless the context otherwise requires:

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1. "Plan" means a plan of merger, interest exchange, conversion, domestication or division, as
applicable.
2. "Transaction" means a merger, an interest exchange, a conversion, a domestication or a
division, as applicable.
B. Except for terms defined in chapters 24 through 40 of this title or unless the context otherwise requires,
terms used in this article have the same meanings prescribed in section 29-2102.
10-11102. Entity restructuring transactions
A. If its board of directors adopts and, if required by section 10-11103, its members and other persons
approve a plan, a domestic corporation may be a party to or otherwise undertake a transaction by
adopting a plan and otherwise complying with this article and:
1. Title 29, chapter 6, article 2 for a merger.
2. Title 29, chapter 6, article 3 for an interest exchange.
3. Title 29, chapter 6, article 4 for a conversion.
4. Title 29, chapter 6, article 5 for a domestication.
5. Title 29, chapter 6, article 6 for a division.
B. The effective time and date of the transaction are as provided in title 29, chapter 6. Except as
expressly set forth in this article, the procedures regarding the effect of and all other aspects of the
transaction are governed by title 29, chapter 6.
C. This section does not limit the power of a corporation to acquire all or part of the interests of another
entity through a voluntary exchange or otherwise.
10-11103. Action on plan
A. If the members of a domestic corporation or other persons are entitled to vote on or approve the plan,
except as provided in subsection G of this section, after adopting a plan, the board of directors of the
corporation shall submit the plan for approval by its members and the other persons.
B. For a plan to be approved all of the following must occur:
1. The board of directors recommends the plan to the members, unless the board of directors
determines that because of a conflict of interest or other special circumstances it should not make
a recommendation and communicates the basis for its determination to the members with the
plan.
2. The members entitled to vote on the plan approve the plan.
3. Each person whose approval is required by the articles of incorporation for a transaction of the
kind contemplated by the plan approves the plan in writing.
C. The board of directors may condition its submission of the plan on any basis.
D. If the corporation submits the transaction for member action at a membership meeting, the corporation
shall notify each member of the proposed membership meeting at which the plan is to be submitted for
approval in accordance with section 10-3705. The notice shall state that the purpose or one of the
purposes of the meeting is to consider the plan and shall contain or be accompanied by a copy or
summary of the plan.
E. Unless chapters 24 through 40 of this title, the articles of incorporation or the board of directors acting
pursuant to subsection C of this section requires a greater vote or voting by class, the plan to be
authorized shall be approved by a majority of the votes cast or a majority of the voting power of the class,
whichever is less.
F. Voting by a class of members is required on a plan if the plan contains a provision that, if contained in
a proposed amendment to articles of incorporation or bylaws, would entitle the class of members to vote
as a class on the proposed amendment under section 10-11004 or 10-11022. The plan is approved by a
class of members by two-thirds of the votes cast by the class or a majority of the voting power of the
class, whichever is less.
G. Unless the articles of incorporation otherwise require, action by the members of a domestic corporation
that is the surviving corporation on a plan of merger is not required if all of the following conditions exist:
1. The articles of incorporation of the surviving corporation will not differ, except for amendments
enumerated in section 10-11002, from its articles of incorporation before the merger.
2. Each member of the surviving corporation who was a member immediately before the effective
date of merger will hold the same number of memberships with identical designations,
preferences, limitations and relative rights immediately after the effective date of merger.
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3. The number of voting members existing immediately after the merger, plus the number of
voting memberships issuable as a result of the merger, will not exceed more than twenty per cent
the total number of voting memberships of the surviving corporation existing immediately before
the merger.
4. The number of memberships, if any, that entitle the holders of the memberships to participate
without limitation in distributions existing immediately after the merger, plus the number of
participating memberships issuable as a result of the merger, will not exceed the total number of
participating memberships existing immediately before the merger by more than ninety per cent.
10-11105. Statement of merger or interest exchange; publication
Within sixty days after the commission approves the filing, either of the following must occur:
1. A copy of the statement of merger or interest exchange shall be published. An affidavit
evidencing the publication may be filed with the commission.
2. The commission shall input the information regarding the approval into the database as
prescribed by section 10-130.
10-11108. Requests, devises and gifts
Unless the will or other instrument otherwise specifically provides, any bequest, devise, gift, grant or
promise that is contained in a will or other instrument of donation, subscription or conveyance, that is
made to a domestic nonprofit corporation and that takes effect or remains payable after the transaction
inures, as applicable, to the surviving entity in a merger, the acquiring entity in an interest exchange, the
converted entity in a conversion, the domesticated entity in a domestication and, as specified in the
statement of division, one or more of the resulting entities in a division.

Title 10, Chapter 35 SALE OF ASSETS-NONPROFIT CORPORATIONS
Article 1 General Provisions
10-11201. Sale of assets in regular course of activities and mortgage of assets
A. On the terms and conditions and for the consideration determined by the board of directors, a
corporation may:
1. Sell, lease, exchange or otherwise dispose of all or substantially all of its property in the usual
and regular course of its activities.
2. Mortgage, pledge, dedicate to the repayment of indebtedness, whether with or without
recourse, or otherwise encumber any or all of its property whether or not in the usual and regular
course of its activities.
3. Transfer any or all of its property to a corporation all the shares of memberships of which are
owned by the corporation.
B. Unless the articles of incorporation require it, approval by the members or any other person of a
transaction described in subsection A is not required.
10-11202. Sale of assets other than in regular course of activities
A. On the terms and conditions and for the consideration determined by the corporation's board of
directors, a corporation may sell, lease, exchange or otherwise dispose of all or substantially all of its
property, with or without the goodwill, other than in the usual and regular course of its activities.
B. For a proposed transaction to be approved all of the following shall have occurred:
1. The board of directors shall approve the transaction. If the members of the corporation are
entitled to vote on the proposed transaction, the board of directors shall submit the proposed
transaction for approval by its members and shall recommend the proposed transaction to the
members, unless the board of directors determines that because of a conflict of interest or other
special circumstances it should not make a recommendation and communicates the basis for its
determination to the members with the plan.
2. If the members of the corporation are entitled to vote on the proposed transaction, the
members entitled to vote on the proposed transaction shall approve the proposed transaction.

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3. Each person whose approval is required by the articles of incorporation for the sale, lease,
exchange or other disposal shall approve the proposed transaction in writing.
C. The board of directors may condition its submission of the proposed transaction on any basis.
D. If the corporation submits the transaction for member action at a membership meeting, the corporation
shall notify each member to which the proposed transaction is to be submitted for approval of the
proposed membership meeting in accordance with section 10-3705. The notice shall state that the
purpose or one of the purposes of the meeting is to consider the proposed transaction and shall contain
or be accompanied by a copy or summary of a description of the transaction.
E. Unless chapters 24 through 40 of this title, the articles of incorporation or the board of directors acting
pursuant to subsection C of this section, requires a greater vote or voting by class, a majority of the votes
cast or a majority of the voting power of the class, whichever is less, shall approve the proposed
transaction to be authorized.
F. At any time before consummation of the sale, lease, exchange or other disposition of property, the
transaction may be abandoned, subject to any contractual rights, without further action by the members
or any other person who approved the transaction, in accordance with the procedure set forth in the
resolution proposing the transaction or, if none is set forth, in the manner determined by the board of
directors.
G. A transaction that constitutes a distribution is governed by sections 10-11301 and 10-11302 and not by
this section.
H. Except as provided in subsection K of this section and chapter 35.1 of this title, any person who
intends to purchase, lease or otherwise acquire all or substantially all of the assets of a tax exempt
corporation described in section 43-1201, paragraph 4, or all or substantially all of the assets located in
this state of a tax exempt foreign corporation described in section 501(c)(3) of the internal revenue code
of 1986 and is conducting affairs in this state, shall comply with subsection B of this section before such
purchase, lease or acquisition if either:
1. The person is a tax exempt organization described in section 43-1201, paragraph 4 or section
501(c)(3) of the internal revenue code of 1986 but intends to use in an unrelated trade or
business, determined by applying section 43-1201, paragraph 4 or section 513(a) of the internal
revenue code of 1986 to such organization, any substantial portion of the assets to be acquired
which were not being used in an unrelated trade or business of the corporation or foreign
corporation conveying the assets immediately before the proposed purchase, lease or
acquisition.
2. The person is not a tax exempt organization described in section 43-1201, paragraph 4 or
section 501(c)(3) of the internal revenue code of 1986.
I. A person subject to the requirements of subsection H of this section shall give public notice of the
intended transaction in accordance with subsection J of this section and shall hold a public hearing on the
intended transaction no less than ten days after the first publication of the notice and no less than ten
days before the intended purchase, lease or acquisition occurs. The sole purpose of the public hearing is
to receive public comment regarding the proposed transaction. The public hearing shall be held before at
least two representatives of the person intending to purchase, lease or otherwise acquire the assets of
the corporation or foreign corporation and at least two representatives of the corporation or foreign
corporation.
J. Notice of the intended transaction shall include the time, date and place of the public hearing, the
names of the parties to the transaction, a general summary of the intended transaction, a general
description of the assets to be purchased, leased or otherwise acquired and a general description of the
intended use of the assets after the completion of the transaction. The notice shall be published three
consecutive times in a newspaper of general circulation in the county of the known place of business of
the corporation or foreign corporation from which the assets are intended to be purchased, leased or
otherwise acquired. The first notice shall be published no less than twenty days before the intended
purchase, lease or acquisition occurs.
K. The requirements of subsections I and J of this section do not apply to the purchase, lease or other
acquisition of assets under this section from a domestic or foreign corporation as provided in this section
if any of the following applies:
1. The transaction involves assets having a book value at the time of the transaction, net of
accumulated depreciation, of less than two million dollars.

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2. The transaction is in the usual course of business of the transferor or in connection with the
mortgage or pledge of any or all property and assets of the corporation or foreign corporation
whether or not in its usual and regular course of business.
3. The transferor has assets immediately prior to such transaction, with a book value of more than
ten million dollars, net of accumulated depreciation.
4. The transaction is to enable the transferor to finance the purchase of assets or to refinance
assets already owned by it, or if, after the transaction has been completed, the transferor
continues to have possession of the assets purchased, leased or otherwise acquired or used in
the usual and regular course of its business.
5. The transferor offers goods or services only to members who are entitled to vote for its board
of directors.
6. The transferor is organized for religious purposes and does not have, as a substantial portion
of its business, the offering of goods or services on a regular basis to the public for remuneration.
7. The purchase, lease or sale of assets as described in subsection A of this section by the
United States, this state, a political subdivision of this state or an agency or instrumentality of
such a governmental entity.
8. The purchase, lease or sale of assets as described in subsection A of this section by a
hospital, medical, dental or optometric service corporation licensed pursuant to title 20, chapter 4,
article 3.
L. For the purposes of subsection K, paragraph 6 of this section:
1. Goods and services shall include, but are not limited to, medical, hospital, dental or counseling
or social services offered on a regular basis to the public for remuneration.
2. A transferor organized for religious purposes includes a corporation or foreign corporation that
controls or is controlled directly or indirectly by a corporation or foreign corporation organized for
religious purposes.
M. The exemption provided by subsection K, paragraph 7 of this section does not apply to a corporation
or foreign corporation that provides services to or operates assets of such a governmental entity pursuant
to a lease or contract.

Title 10, Chapter 35.1 HOSPITAL AND COMMUNITY HEALTH CENTER
MERGERS AND OTHER TRANSACTIONS
Article 1 General Provisions
10-11251. Definitions
In this chapter, unless the context otherwise requires:
1. "Assets" means all real, personal, tangible and intangible property and rights in property,
including cash, buildings, equipment, investments and contracts with other entities.
2. "Community benefit activity" means any activity furthering community benefit purposes
including any health care activity that includes education, prevention, promotion of community
health, indigent care or any other charitable purpose.
3. "Community benefit assets" means every asset that has been used in connection with
community benefit activity during the previous year.
4. "Community benefit organization" means a nonprofit charitable organization that is tax exempt
under section 501(c)(3) of the internal revenue code and whose mission is solely to engage in
community benefit activities.
5. "Community benefit purposes" means those purposes for which an entity may qualify for
exemption pursuant to section 43-1201, paragraph 4 or section 501(c)(3) of the internal revenue
code, or for similar activity engaged in by a for profit organization.
6. "Community health center" means a primary care facility that provides medical care in
medically underserved areas as designated in section 36-2352 or in medically underserved areas
or medically underserved populations as designated by the United States department of health
and human services.

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7. "Nonprofit health care entity" means a licensed hospital or community health center that holds
tax exempt status pursuant to section 43-1201, paragraph 4 or section 501(c)(3) of the internal
revenue code.
8. "Notice of completion" means the written notice that is sent by the hearing officer to the
chairman of the corporation commission after the hearing officer holds a public hearing and files a
summary report pursuant to section 10-11253.
10-11252. Scope; included transactions; excluded transactions
A. Except as provided in subsections B and C of this section, this chapter applies to any nonprofit health
care entity that intends to sell, transfer, lease, exchange, option, convey, convert, give, merge or
otherwise dispose of all or substantially all of its assets to or with another nonprofit health care entity or a
for profit entity, including entering into a joint venture involving all or substantially all of its assets. The
requirements of section 10-11202 do not apply to a nonprofit health care entity.
B. This chapter does not apply to any physician or licensed health care provider contract with a hospital
or community health center. This chapter shall not affect any contract entered into between a physician or
licensed health care provider or group of physicians or licensed health care providers and a licensed
hospital.
C. This chapter does not apply to transactions:
1. Involving a transfer of community benefit assets of a licensed hospital or community health
center with a book value of less than one million dollars, net of accumulated depreciation as of
the date of the closing date of the intended transaction.
2. Enabling a party to finance the purchase of assets, refinance assets or mortgage or pledge
assets already owned by the party, whether or not in its usual course of business.
3. Between or among a nonprofit health care entity and affiliated nonprofit entities that are part of
a common line of ownership or control.
10-11253. Public hearing; notice; requirements; summary report
A. No later than ninety days before the anticipated closing of the intended transaction, any nonprofit
health care entity that intends to engage in any of the transactions described in section 10-11252,
subsection A shall give written notice to the director of the department of health services and the attorney
general. The written notice shall include all of the following information:
1. The names, addresses and telephone numbers of the parties to the intended transaction.
2. The names, addresses and telephone numbers of the attorneys or other persons who
represent the parties in connection with the intended transaction.
3. A general summary of the intended transaction.
4. A general description of the assets involved in the intended transaction and the intended use of
the assets after the closing of the intended transaction.
5. A general summary of all collateral transactions that relate to the intended transaction,
including the names, addresses and telephone numbers of the parties involved in the collateral
transactions.
6. The anticipated date of completion of the intended transaction.
B. The notice and information required pursuant to subsection A of this section and information submitted
pursuant to subsection H of this section are public records.
C. Within thirty days after the nonprofit health care entity sends the written notice prescribed in subsection
A of this section, the parties to the intended transaction shall:
1. Select a hearing officer to conduct the public hearing required by this section and determine a
time and place within this state for the public hearing with the agreement of the director of the
department of health services.
2. Publish a notice of the time and place for the public hearing at least three consecutive times in
at least one newspaper of general circulation in the county in which the nonprofit health care
entity has its principal place of business.
D. The hearing officer shall hold the public hearing within ten days after the last publication of the public
notice.
E. The purpose of the public hearing is to provide the information described in subsection F of this section
and to receive comments from the public and other interested parties.

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F. The parties shall present written summary information at the public hearing that sets forth all of the
following:
1. The extent to which the intended transaction impacts community benefit activities and is
consistent with community benefit purposes, including a description of the resources that will be
committed to community benefit purposes following the intended transaction.
2. Whether the intended transaction creates or has the likelihood of creating an adverse effect on
the access to or availability or cost of health care services.
3. Whether any director, officer, agent or employee of the entity will receive any community
benefit asset or will benefit directly or indirectly from the intended transaction, except for the
receipt of compensation for professional services relating to the intended transaction for normal
compensation for services rendered.
4. The extent to which the nonprofit health care entity used due diligence in the selection of the
entity that will receive any community benefit asset and in the negotiation of the price and other
terms and conditions of the transaction.
5. The extent to which the parties will continue to use the nonprofit health care entity's community
benefit assets for community benefit purposes following the intended transaction, or, if applicable,
the proceeds of the disposition of the assets will be deposited in a community benefit organization
for community benefit purposes.
6. Whether any initial board of directors members of any entity changed or created by the
intended transaction will reside in or near the communities affected by the intended transaction.
7. That any community benefit organization established to hold the proceeds of the disposition of
assets is organized for community benefit purposes as required under federal and state law.
G. The attorney general may present information at the public hearing.
H. The hearing officer conducting the public hearing shall compile a summary report of the public hearing
proceedings and shall transmit the summary report, a notice of completion and copies of all written
information presented at the hearing to the director of the department of health services and the attorney
general.
I. The parties to the intended transaction shall pay for all costs associated with the hearing officer, notice,
publication of notice, public hearing and summary report.
10-11254. Applicability
A. Nothing in this chapter:
1. Affects the provisions of chapters 24 through 35 and chapters 36 through 40 of this title
regarding the corporation commission's acceptance or denial of new, restated or amended
articles of incorporation.
2. Affects the operation of state or federal antitrust laws or the attorney general's enforcement of
those laws.
3. Is intended to create any private or governmental right or cause of action relating to the
transaction or related parties.
B. This chapter does not apply to any transactions for which a letter of intent or memorandum of
understanding or similar documentation was executed on or before December 31, 1996.

Title 10, Chapter 36 DISTRIBUTIONS-NONPROFIT CORPORATIONS
Article 1 General Provisions
10-11301. Prohibited distributions
Except as authorized by section 10-11302, a corporation shall not make any distributions.
10-11302. Authorized distributions
A. A corporation may purchase its memberships if after the purchase is completed both:
1. The corporation would be able to pay its debts as the debts become due in the usual course of
its activities.
2. The corporation's total assets would at least equal the sum of its total liabilities.
B. A corporation may make distributions on dissolution that conform to chapter 37 of this title.
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C. A corporation may make distributions to members who are domestic or foreign nonprofit corporations if
after the distribution is made both:
1. The corporation would be able to pay its debts as the debts become due in the usual course of
its activities.
2. The corporation's total assets would at least equal the sum of its total liabilities.

Title 10, Chapter 37 DISSOLUTION-NONPROFIT CORPORATIONS
Article 1 Voluntary Dissolution
10-11401. Dissolution by incorporators or directors and third persons
A. A majority of the incorporators or initial directors of a corporation that has not commenced activities or
the board of directors of a corporation that has no members or has no members entitled to vote on
dissolution or that has not commenced activities may dissolve the corporation by delivering to the
commission for filing articles of dissolution. An incorporator or a director, whose signature shall be
acknowledged, shall execute the articles of dissolution, and the articles shall set forth all of the following:
1. The name of the corporation.
2. The date of its incorporation.
3. Either:
(a) That the corporation has no members.
(b) That the corporation has no members entitled to vote on dissolution.
(c) That the corporation has not commenced activities.
4. That the dissolution was duly authorized by act of the board of directors or a majority of the
incorporators or initial directors and, if required by section 10-11030, act of any other persons.
B. The board of directors, incorporators or initial directors in approving the dissolution shall adopt a plan
of dissolution indicating to whom the assets owned or held by the corporation will be distributed after all
creditors have been paid.
C. Authorization of dissolution pursuant to this section shall require the approval in writing by any person
or persons whose approval is required for dissolution.
10-11402. Dissolution by directors and third persons
A. If the members of the corporation are entitled to vote on dissolution, a corporation's board of directors
may propose dissolution for submission to the members.
B. For a proposal to dissolve to be adopted all of the following shall have occurred:
1. The board of directors shall recommend dissolution to the members, unless the board of
directors determines that because of conflict of interest or other special circumstances it should
make no recommendation and communicates the basis for its determination to the members.
2. The members entitled to vote shall approve the proposal to dissolve as provided in subsection
E or F of this section.
3. Each person whose approval is required by the articles of incorporation for dissolution shall
approve the plan in writing.
C. The board of directors may condition its submission of the proposal for dissolution on any basis.
D. The corporation shall notify each member of the proposed membership meeting in accordance with
section 10-3705. The notice shall also state that the purpose or one of the purposes of the meeting is to
consider dissolving the corporation and shall contain or be accompanied by a copy or summary of the
plan of dissolution.
E. Unless the articles of incorporation or the board of directors acting pursuant to subsection C of this
section requires a greater vote or voting by class, in order to adopt the proposal to dissolve a majority of
the votes cast or a majority of the voting power, whichever is less, shall approve the proposal to dissolve.
F. If the board of directors submits the dissolution for member action by written consent or written ballot,
the material soliciting the approval shall contain or be accompanied by a copy or summary of the plan of
dissolution.
G. The plan of dissolution shall indicate to whom the assets owned or held by the corporation will be
distributed after all creditors have been paid.

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10-11403. Articles of dissolution
A. At any time after dissolution is authorized, the corporation may dissolve by delivering to the
commission articles of dissolution setting forth all of the following:
1. The name of the corporation.
2. The date dissolution was authorized.
3. A statement that the dissolution was duly authorized by an act of the members or an act of the
board of directors and, if applicable, with the approval required pursuant to section 10-11402.
B. A corporation is dissolved on the effective date of its articles of dissolution.
C. The articles of dissolution shall not be considered complete until all fees, penalties and costs required
to be paid under this title have been paid.
D. Within sixty days after the commission approves the filing, either of the following must occur:
1. A copy of the articles of dissolution shall be published. An affidavit evidencing the publication
may be filed with the commission.
2. The commission shall input the information regarding the approval into the database as
prescribed by section 10-130.
E. The articles of dissolution are not complete until the commission has received a notice from the
department of revenue that the tax levied under title 42, chapter 5, article 1 against the corporation has
been paid, or until the department of revenue notifies the commission that the corporation is not subject to
the tax and the commission has received from the department of revenue a certificate issued by the
department of revenue pursuant to section 43-1151.
F. Notwithstanding subsection C of this section, if an annual report becomes due on or after the first date
on which the articles of dissolution are delivered to the commission for filing, the annual report
requirement prescribed in section 10-11622 is suspended for a period of six months after the first date on
which the articles of dissolution are delivered to the commission for filing. On the expiration of the sixmonth suspension, if the articles of dissolution are not approved for filing or if the corporation is
administratively dissolved pursuant to section 10-11420, paragraph 9, all past due annual reports
required by section 10-11622, together with fees, are owed as if the suspension never occurred.
10-11404. Revocation of dissolution
A. A corporation may revoke its dissolution within one hundred twenty days of its effective date.
B. Revocation of dissolution shall be authorized in the same manner as the dissolution was authorized
unless that authorization permitted revocation by action of the board of directors alone, in which event the
board of directors may revoke the dissolution without action by the members or any other person.
C. After the revocation of dissolution is authorized, the corporation may revoke the dissolution by
delivering to the commission for filing articles of revocation of dissolution, together with a copy of its
articles of dissolution, that set forth all of the following:
1. The name of the corporation.
2. The effective date of the dissolution that was revoked.
3. The date that the revocation of dissolution was authorized.
4. If the corporation's board of directors, or its incorporators or initial directors, revoked the
dissolution a statement to that effect.
5. If the corporation's board of directors revoked a dissolution authorized by the members alone
or in conjunction with another person or persons, a statement that revocation was permitted by
action by the board of directors alone pursuant to that authorization.
6. If member or third person action was required to revoke the dissolution, a statement that
revocation was permitted by act of the members and act of each third person, as applicable.
D. Revocation of dissolution is effective on the effective date of the articles of revocation of dissolution.
E. When the revocation of dissolution is effective, it relates back to and takes effect as of the effective
date of the dissolution and the corporation resumes carrying on its activities as if dissolution had never
occurred.
10-11405. Effect of dissolution
A. A dissolved corporation continues its corporate existence but shall not carry on any activities except
that activity appropriate to wind up and liquidate its affairs, including:
1. Preserving and protecting its assets and minimizing its liabilities.
2. Discharging or making provision for discharging its liabilities and obligations.
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3. Disposing of its properties that will not be distributed in kind.
4. Returning, transferring or conveying assets held by the corporation on a condition requiring
return, transfer or conveyance, which condition occurs by reason of the dissolution, in accordance
with such condition.
5. Transferring, subject to any contractual or legal requirements, its assets as provided in or
authorized by its articles of incorporation or bylaws.
6. If no provision has been made in its articles of incorporation or bylaws for distribution of assets
on dissolution and the corporation is organized for charitable, religious, eleemosynary,
benevolent, educational or similar purposes, to one or more domestic or foreign corporations,
societies or organizations engaged in activities substantially similar to those of the dissolving
corporation.
7. If no provision has been made in its articles of incorporation or bylaws for distribution of assets
on dissolution, transferring its assets to its members or, if it has no members, to those persons
whom the corporation holds itself out as benefitting or serving.
8. Doing every other act necessary to wind up and liquidate its assets and affairs.
B. Dissolution of a corporation does not:
1. Transfer title to the corporation's property, except as provided in section 10-11421.
2. Subject its directors or officers to standards of conduct that are different from those prescribed
in chapter 31 of this title.
3. Change quorum or voting requirements for its board of directors or members, change
provisions for selection, resignation or removal of its directors or officers, or both, or change
provisions for amending its bylaws.
4. Prevent commencement of a proceeding by or against the corporation in its corporate name or
any officers, directors or members or affect applicable statutes of limitations.
5. Abate or suspend a proceeding pending by or against the corporation or any officers, directors
or members on the effective date of dissolution.
6. Terminate the authority of the statutory agent of the corporation.
10-11406. Known claims against dissolved corporation
A. A dissolved corporation may dispose of the known claims against it by following the procedure
described in this section.
B. The dissolved corporation shall notify its known claimants in writing of the dissolution at any time and
from time to time after its effective date. The written notice shall:
1. Describe information that shall be included in a claim.
2. Provide a mailing address where a claim may be sent.
3. State the deadline, which may not be fewer than one hundred twenty days from the effective
date of the written notice, by which the dissolved corporation must receive the claim.
4. State that the claim will be barred if not received by the deadline.
C. A claim against the dissolved corporation is barred either:
1. If a claimant who was given written notice under subsection B of this section does not deliver
the claim to the dissolved corporation by the deadline.
2. If a claimant whose claim was rejected by the dissolved corporation does not commence a
proceeding to enforce the claim within ninety days from the effective date of the rejection notice.
D. For purposes of this section, claim does not include a contingent claim. Notwithstanding the foregoing,
a claim that is contingent as of the effective date of dissolution but later ripens into a known claim or a
claim based on an event occurring after the effective date of dissolution may be disposed of at such later
time by the dissolved corporation by following the procedures described in subsections B and C.
10-11407. Unknown claims against dissolved corporation
A. A dissolved corporation may also publish notice of its dissolution and request that persons with claims
against the corporation present them in accordance with the notice.
B. The notice shall:
1. Be published one time in a newspaper of general circulation in the county where the dissolved
corporation's known place of business is or was last located.
2. Describe the information that must be included in a claim and provide a mailing address where
the claim may be sent.
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3. State that a claim against the corporation will be barred unless a proceeding to enforce the
claim is commenced within five years after the publication of the notice.
C. If the dissolved corporation publishes a newspaper notice in accordance with subsection B of this
section, the claim of each of the following claimants is barred unless the claimant commences a
proceeding to enforce the claim against the dissolved corporation within five years after the publication
date of the newspaper notice:
1. A claimant who did not receive written notice under section 10-11406.
2. A claimant whose claim was timely sent to the dissolved corporation but not acted on.
3. A claimant whose claim is contingent or based on an event occurring after the effective date of
dissolution and is not disposed of in accordance with section 10-11406, subsection D.
D. If a claim, including a contingent claim or a claim based on an event occurring after the effective date
of dissolution, is not barred by section 10-11406 or this section, the claim may be enforced either:
1. Against the dissolved corporation to the extent of its undistributed assets.
2. If the assets have been distributed in liquidation, against any person, other than a creditor of
the corporation, to whom the corporation distributed its property to the extent of the distributee's
pro rata share of the claim or the corporate assets distributed to that person in liquidation,
whichever is less, but the distributee's total liability for all claims under this section shall not
exceed the total amount of assets distributed to the distributee.

Article 2 Administrative Dissolution
10-11420. Grounds for administrative dissolution
The commission may commence a proceeding under section 10-11421 to administratively dissolve a
corporation if either:
1. The corporation does not pay within sixty days after they are due any fees or penalties
imposed by chapters 24 through 40 of this title.
2. The corporation does not deliver its annual report to the commission within sixty days after it is
due.
3. The corporation is without a statutory agent or known place of business in this state.
4. The corporation does not notify the commission within sixty days that its statutory agent or
known place of business has been changed, that its statutory agent has resigned or that its
known place of business has been discontinued.
5. The corporation has failed to make any publication required by this title, provided the
commission has notified the corporation of the intent of the commission to commence a
dissolution proceeding for that reason and the corporation has failed to file an affidavit or other
appropriate evidence of publication within sixty days after that notice.
6. The corporation's period of duration stated in its articles of incorporation expires.
7. The corporation has failed to comply with section 10-3202, subsection F.
8. Any officer or other representative of the corporation has made any misrepresentation of a
material matter in any application, report or other document submitted by the corporation
pursuant to chapters 24 through 40 of this title.
9. The commission has not received the notice required by section 10-11403, subsection E within
six months after filing articles of dissolution.
10. The corporation has failed to file a certificate of disclosure or answer interrogatories as
prescribed in chapters 24 through 40 of this title.
11. The corporation failed to comply with section 10-11623, subsection A.
10-11421. Procedure for and effect of administrative dissolution
A. If the commission determines that one or more grounds exist under section 10-11420 for dissolving a
corporation, it shall serve the corporation with written notice of its determination under section 10-3504.
B. If the corporation does not correct each ground for dissolution or demonstrate to the reasonable
satisfaction of the commission that each ground determined by the commission does not exist within sixty
days after service of the notice is perfected under section 10-3504, the commission shall administratively
dissolve the corporation by signing a certificate of dissolution that recites the ground or grounds for
dissolution and its effective date. The commission shall file the original of the certificate and serve a copy

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on the corporation under section 10-3504. If the corporation that has been dissolved is a utility providing
domestic water services or domestic wastewater services and the corporation has been dissolved for at
least three years, after notice to interested parties, opportunity for objection and hearing before the
commission, the assets of the corporation may be transferred by the commission to a domestic water
improvement district or a domestic wastewater improvement district established pursuant to title 48,
chapter 6 or to a municipality incorporated pursuant to title 9, chapter 1, on receipt by the commission of a
written request from the governing body of the district or municipality.
C. Subject to the provisions of section 10-11422 regarding reinstatement, a corporation administratively
dissolved continues its corporate existence but may not carry on any activities except those necessary to
wind up and liquidate its affairs under section 10-11405 and notify its claimants under sections 10-11406
and 10-11407. If the corporation has not applied for reinstatement within six months after the effective
date of the dissolution, the commission shall release the corporate name for use in accordance with
chapters 24 through 40 of this title or by a person intending to register the name as a trade name
pursuant to title 44, chapter 10, article 3.1.
D. The administrative dissolution of a corporation does not terminate the authority of its statutory agent.
10-11422. Reinstatement following administrative dissolution
A. A corporation administratively dissolved under section 10-11421 may apply to the commission for
reinstatement within six years after the effective date of dissolution unless the corporation is a utility
providing domestic water services or domestic wastewater services and the assets of the corporation
have been transferred to a domestic water improvement district or a domestic wastewater improvement
district established pursuant to title 48, chapter 6 or to a municipality incorporated pursuant to title 9,
chapter 1. The application shall both:
1. Recite the name of the corporation and the effective date of its administrative dissolution.
2. State that the ground or grounds for dissolution either did not exist or have been eliminated.
B. If the commission determines that the application contains the information required by subsection A of
this section and that the information is correct, the commission shall cancel the certificate of dissolution
and prepare a certificate of reinstatement that recites this determination and the effective date of
reinstatement, file the original of the certificate and serve a copy on the corporation under section 103504.
C. When reinstatement is effective, it relates back to and takes effect as of the effective date of the
administrative dissolution and the corporation shall resume carrying on its activities as if the
administrative dissolution had never occurred.
D. If another corporation has adopted the name of the corporation or another person has adopted the
name of the corporation as a trade name, the application shall be accompanied by articles of amendment
that are in accordance with chapter 33, article 1 of this title and that adopt a new name for the corporation
that complies with chapter 27, article 1 of this title.

Article 3 Judicial Dissolution
10-11430. Grounds for judicial dissolution
A. The court may dissolve a corporation in a proceeding by the attorney general if it is established that
either:
1. The corporation obtained its articles of incorporation through fraud.
2. The corporation has continued to exceed or abuse the authority conferred upon it by law.
B. Except as provided in the articles of incorporation or bylaws of a corporation organized primarily for
religious purposes, the court may dissolve a corporation in a proceeding by fifty members or by members
holding twenty-five per cent of the voting power, whichever is less, or by a director or any person
specified in the articles of incorporation, if any of the following is established:
1. The directors are deadlocked in the management of the corporate affairs, the members, if any,
are unable to breach the deadlock and irreparable injury to the corporation is threatened or being
suffered or the affairs of the corporation cannot be conducted generally because of the deadlock.
2. The directors or those in control of the corporation have acted, are acting or will act in a
manner that is illegal, oppressive or fraudulent.

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3. The members are deadlocked in voting power and have failed, for a period that includes at
least two consecutive annual meeting dates to elect successors to directors whose terms have or
would otherwise have expired.
4. The corporate assets are being wasted, misapplied or diverted for noncorporate purposes.
C. The court may dissolve a corporation in a proceeding by a creditor if it is established that either:
1. The creditor's claim has been reduced to a judgment, the execution on the judgment has been
returned unsatisfied and the corporation is insolvent.
2. The corporation has admitted in writing that the creditor's claim is due and owing and the
corporation is insolvent.
D. The court may dissolve a corporation in a proceeding by the corporation to have its voluntary
dissolution continued under court supervision.
10-11431. Procedure for judicial dissolution
A. Venue for a proceeding by the attorney general to dissolve a corporation or for a proceeding brought
by any other party named in section 10-11430 is in the county where a corporation's known place of
business is or was last located.
B. It is not necessary to make directors or members parties to a proceeding to dissolve a corporation
unless relief is sought against them personally.
C. A court in a proceeding brought to dissolve a corporation may issue injunctions, appoint a receiver with
all powers and duties the court directs, take other action required to preserve the corporate assets
wherever located and carry on the activities of the corporation until a full hearing can be held.
10-11432. Receivership
A. A court in a judicial proceeding brought to dissolve a corporation may appoint one or more receivers to
wind up and liquidate or manage the affairs of the corporation. After notifying all parties to the proceeding
and any interested persons designated by the court, the court shall hold a hearing before appointing a
receiver. The court appointing a receiver has exclusive jurisdiction over the corporation and all of its
property wherever located.
B. The court may appoint an individual or a domestic or foreign business or nonprofit corporation
authorized to transact business in this state as a receiver. The court may require the receiver to post
bond, with or without sureties in an amount the court directs.
C. The court shall describe the powers and duties of the receiver in its appointing order, which may be
amended from time to time. Among other powers, the receiver may exercise all of the powers of the
corporation, through or in place of its board of directors, executive committee or officers, to the extent
necessary to carry on the ordinary and necessary activities of the corporation and to manage the affairs
of the corporation in the best interests of its members and creditors.
D. The court from time to time during the receivership may order compensation paid and expense
disbursements or reimbursements made to the receiver and its counsel from the assets of the corporation
or proceeds from the sale of the assets.
E. A receiver of a corporation may sue and defend in all courts in his own name as receiver of such
corporation.
10-11433. Decree of dissolution
A. If after a hearing the court determines that one or more of the grounds for judicial dissolution described
in section 10-11430 exist, it may enter a decree that dissolves the corporation and specifies the effective
date. The clerk of the court shall deliver a certified copy of the dissolution decree to the commission which
shall file it.
B. After entering the decree of dissolution, the court shall direct the winding up and liquidation of the
corporation's affairs in accordance with section 10-11405 and the notification of claimants in accordance
with sections 10-11406 and 10-11407.

Article 4 Miscellaneous
10-11440. Deposit with department of revenue
A. Assets of a dissolved corporation that should be transferred to a creditor, claimant or member of the
corporation who cannot be found or who is not competent to receive them and does not have a legal
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representative who is legally competent to receive them shall be reduced to cash subject to known trust
restrictions and deposited with the unclaimed property division of the department of revenue for
safekeeping.
B. Notwithstanding subsection A, in the discretion of the unclaimed property division of the department of
revenue property may be received and held in kind.
C. If the creditor, claimant, member or legal representative who is legally competent to receive the
distributive portion furnishes satisfactory proof of entitlement to the amount deposited or property held in
kind, the unclaimed property division of the department of revenue shall pay the creditor, member or legal
representative that amount or property.

Title 10, Chapter
CORPORATIONS

38

FOREIGN

CORPORATIONS-NONPROFIT

Article 1 Grant of Authority
10-11501. Authority to conduct affairs required
A. A foreign corporation shall not conduct affairs in this state until it is granted authority to transact
business in this state as provided in this chapter from the commission.
B. The following activities, among others, do not constitute conducting affairs within the meaning of
subsection A:
1. Maintaining, defending or settling any proceeding.
2. Holding meetings of the board of directors or members or carrying on other activities
concerning internal corporate affairs.
3. Maintaining bank accounts.
4. Maintaining offices or agencies for the transfer, exchange and registration of memberships or
securities or maintaining trustees or depositaries with respect to those securities.
5. Selling through independent contractors.
6. Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if
the orders require acceptance outside this state before they become contracts.
7. Creating or acquiring indebtedness, mortgages and security interests in real or personal
property.
8. Securing or collecting debts or enforcing mortgages and security interests in property securing
the same.
9. Owning, without more, real or personal property.
10. Conducting an isolated transaction that is completed within thirty days and that is not one in
the course of repeated transactions of a like nature.
11. Conducting affairs in interstate commerce.
12. Being a limited partner of a limited partnership or a member of a limited liability company.
C. The list of activities in subsection B is not exhaustive.
10-11502. Consequences for conducting affairs without authority
A. A foreign corporation conducting affairs in this state without a grant of authority shall not be permitted
to maintain a proceeding in any court in this state until it is authorized to transact business.
B. The successor to a foreign corporation that transacted business in this state without a grant of
authority and the assignee of a cause of action arising out of that business may not maintain a
proceeding on that cause of action in any court in this state until the foreign corporation or its successor
obtains authority to transact business.
C. A court may stay a proceeding commenced by a foreign corporation, its successor or its assignee until
it determines whether the foreign corporation, its successor or its assignee requires authority to transact
business in this state. If it so determines, the court may further stay the proceeding until the foreign
corporation or its successor obtains authority to transact business in this state.
D. A foreign corporation that conducts affairs in this state without authority is liable to this state, for the
years or portions of years during which it transacted business in this state without authority, in an amount
equal to all fees that would have been imposed by chapters 24 through 40 of this title on the corporation if
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it had duly applied for and received authority to conduct business in this state as required by chapters 24
through 40 of this title and thereafter filed all reports required by chapters 24 through 40 of this title. In
addition to all penalties imposed by chapters 24 through 40 of this title for failure to pay the fees, the
corporation shall pay a penalty of up to one thousand dollars to this state for violating this section. The
attorney general may bring proceedings to recover all amounts due this state under this section.
E. Notwithstanding subsections A and B of this section, the failure of a foreign corporation to obtain
authority to transact business in this state does not impair the validity of its corporate acts or prevent it
from defending any proceedings in this state.
F. The attorney general or any other person may bring and maintain an action to enjoin any foreign
corporation from transacting business in this state without authority. On a foreign corporation obtaining
authority, the action shall be dismissed, but the plaintiff shall recover its costs and reasonable attorney
fees. A determination by a court of competent jurisdiction in this state that a party to the action is a foreign
corporation that was required but failed to qualify as a foreign corporation under chapters 24 through 40
of this title is a prima facie evidence against the foreign corporation in any other action brought by or
against it by any other person of the requirement to and failure to qualify.
10-11503. Application for certificate of authority
A. A foreign corporation may apply for authority to conduct affairs in this state by delivering an application
and a certificate of disclosure to the commission for filing. The certificate of disclosure shall contain the
information set forth in section 10-3202, subsection D and is subject to the requirements of section 103202, subsection F. The application shall be executed by the corporation and shall set forth:
1. The name of the foreign corporation and, if its name is unavailable for use in this state, a
corporate name that satisfies the requirements of section 10-11506.
2. The name of the state or country under whose law it is incorporated.
3. Its date of incorporation and period of duration.
4. The street address of its principal office in its state or country of incorporation.
5. The street address of the proposed known place of business of the corporation in this state and
the name and street address of its proposed statutory agent in this state.
6. If its purpose or purposes are narrower than the transaction of any or all lawful affairs in which
corporations may engage in the state or country under whose law it is incorporated, a statement
of the limitations on its purpose.
7. The names and usual business addresses of its current directors and officers.
8. Whether the foreign corporation has members.
9. A brief statement of the character of business that the corporation initially intends actually to
conduct in this state. This statement does not limit the character of business that the corporation
ultimately conducts.
B. The foreign corporation shall deliver the application and the certificate of disclosure to the commission,
together with a copy of its articles of incorporation, any amendments to the articles of incorporation and a
certificate of existence or a document of similar import duly authenticated by the secretary of state or
other official having custody of corporate records in the state or country under whose law it is
incorporated, and the nonrefundable fees required by law.
C. After determining that the application sets forth the information required by this section, does not use
as the name of the corporation in this state a name that is in violation of section 10-11506 and appears in
all other respects to conform to the requirements of this article, the commission shall file the application.
The date of filing shall be the date on which the corporation is granted authority to transact business in
this state.
D. Within sixty days after the commission approves the filing, either of the following must occur:
1. A copy of the application shall be published. An affidavit evidencing the publication may be
filed with the commission.
2. The commission shall input the information regarding the approval into the database as
prescribed by section 10-130.
E. A foreign corporation authorized to transact business in this state is subject to section 10-11623.
10-11504. Delivery of changes; changes requiring amendment to application for authority
A. Whenever the articles of incorporation of a foreign corporation authorized to conduct affairs in this
state are amended or restated by merger or otherwise, within sixty days after the amendment or
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restatement becomes effective, the foreign corporation shall deliver to the commission a copy of the
amendment or restatement duly authenticated by the secretary of state or other official having custody of
corporate records in the state or country where the foreign corporation is incorporated.
B. In addition to the requirement prescribed in subsection A of this section, a foreign corporation
authorized to conduct affairs in this state shall amend its application for authority by filing with the
commission articles of amendment to application for authority if any of the following occurs:
1. The foreign corporation changes its actual corporate name under which it has obtained
authority to conduct affairs in this state pursuant to section 10-11503, subsection A, paragraph 1.
2. The foreign corporation changes its period of duration.
3. The foreign corporation changes its state or country of incorporation.
4. A statement in the application for authority was inaccurate when made.
10-11505. Effect of grant of authority
A. A grant of authority to conduct affairs authorizes the foreign corporation to conduct affairs in this state
subject to the right of the state to revoke the grant of authority as provided in chapters 24 through 40 of
this title.
B. A foreign corporation with a valid grant of authority has the same but no greater rights and enjoys the
same but no greater privileges as and except as otherwise provided by chapters 24 through 40 of this title
and is subject to the same duties, restrictions, penalties and liabilities now or later imposed on a domestic
corporation of like character.
C. Chapters 24 through 40 of this title do not authorize this state to regulate the organization or internal
affairs of a foreign corporation authorized to conduct affairs in this state.
10-11506. Corporate name of foreign corporation
A. If the corporate name of a foreign corporation does not satisfy the requirements of section 10-3401, to
obtain or maintain a grant of authority to conduct affairs in this state the foreign corporation shall use a
fictitious name that satisfies the requirements of section 10-3401 to conduct affairs in this state if its real
name is unavailable and it delivers to the commission for filing a copy of the resolution of its board of
directors, certified by a duly authorized officer, adopting the fictitious name. The foreign corporation shall
not include language in its corporate name stating or implying that the foreign corporation is organized for
a purpose other than that permitted by section 10-3301 and its articles of incorporation.
B. Except as authorized by subsection C of this section, the corporate name, including a fictitious name,
of a foreign corporation shall be distinguishable from:
1. The corporate name of a corporation incorporated under this title or a foreign nonprofit, not for
profit, business or close corporation authorized to transact business or conduct affairs in this
state.
2. A corporate name reserved under section 10-402 or 10-3402 or registered under section 10403 or 10-3403.
3. The fictitious name of another foreign business or nonprofit corporation.
4. The partnership name of a limited partnership organized and registered under the laws of this
state or of a foreign limited partnership authorized to transact business in this state.
5. The name of a limited liability company organized under title 29, chapter 4 or a foreign limited
liability company authorized to transact business in this state.
6. The name of a registered limited liability partnership registered under title 29, chapter 5, article
10 or a foreign registered limited liability partnership authorized to transact business in this state.
7. A trade name registered pursuant to title 44, chapter 10, article 3.1.
C. A corporation may apply to the commission for authorization to use a name that is not distinguishable
from one or more of the names described in subsection B of this section. The commission shall authorize
use of the name applied for if either:
1. The other corporation consents to the use in writing and submits an undertaking in a form
satisfactory to the commission to change its name to a name that is distinguishable from the
name of the applying corporation.
2. The applicant delivers to the commission a certified copy of a final judgment of a court of
competent jurisdiction establishing the applicant's right to use the name applied for in this state.

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D. A corporation may use the name, including a fictitious name, of another domestic or foreign business
or nonprofit corporation that is used in this state if the other corporation is incorporated or authorized to
transact business or conduct affairs in this state and the proposed user corporation either has:
1. Merged with the other corporation.
2. Been formed by reorganization of the other corporation.
3. Acquired all or substantially all of the assets, including the corporate name, of the other
corporation.
E. Chapters 24 through 42 of this title do not control the use of fictitious names.
F. If a foreign corporation authorized to transact business in this state changes its corporate name to one
that does not satisfy the requirements of section 10-3401, it may not transact business in this state under
the changed name until it adopts a name satisfying the requirements of section 10-3401 and amends its
application for authority under section 10-11504.
10-11507. Known place of business and statutory agent of foreign corporation
Each foreign corporation authorized to conduct affairs in this state shall continuously maintain in this state
both:
1. A known place of business that may be the address of its statutory agent.
2. A statutory agent who may be either:
(a) An individual who resides in this state.
(b) A domestic business or nonprofit corporation.
(c) A foreign business or nonprofit corporation authorized to conduct affairs in this state.
(d) A limited liability company formed under title 29.
(e) A limited liability company authorized to transact business in this state.
10-11508. Change of known place of business or statutory agent of foreign corporation
A. A foreign corporation authorized to conduct affairs in this state may change its known place of
business or statutory agent by delivering to the commission for filing a statement of change, which may
be the annual report, that sets forth:
1. The name of the foreign corporation.
2. The street address of its current known place of business.
3. If the current known place of business is to be changed, the street address of the new known
place of business.
4. The name and street address of its current statutory agent.
5. If the current statutory agent is to be changed, the name of its new statutory agent and the new
agent's written consent to the appointment.
B. The statement of change shall be executed by the foreign corporation by an officer and delivered to the
commission. The change or changes set forth in the statement of change are effective on delivery to the
commission for filing.
C. If a statutory agent changes its street address it shall give written notice to the foreign corporation of
the change and shall sign, either manually or in facsimile, and deliver to the commission for filing a
statement that complies with the requirements of subsection A and recites that the foreign corporation
has been given written notice of the change. The change or changes are effective on delivery to the
commission for filing.
10-11509. Resignation of statutory agent of foreign corporation
A. The statutory agent of a foreign corporation may resign the agency appointment by delivering to the
commission for filing an original signed statement of resignation. The statement of resignation may
include a disclosure that the known place of business of the foreign corporation has changed or has been
discontinued. The statutory agent shall give written notification of the resignation of the foreign
corporation at its last known address, other than that of the resigning statutory agent.
B. After the receipt and filing of the statement of resignation, the commission shall mail one copy to the
foreign corporation at its known place of business within the state, if not discontinued. The commission
shall mail another copy of the statement of resignation to the foreign corporation at its last known office in
the jurisdiction of incorporation.

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C. The agency appointment is deemed terminated and the known place of business is discontinued, if so
provided, on the thirty-first day after the date on which the statement was delivered to the commission for
filing.
10-11510. Service on foreign corporation
A. The statutory agent appointed by a foreign corporation is an agent of the foreign corporation on whom
process, notice or demand that is required or permitted by law to be served on the foreign corporation
may be served and that, when so served, is lawful personal service on the foreign corporation.
B. If a foreign corporation fails to appoint or maintain a statutory agent at the address shown on the
records of the commission, the commission is an agent of the foreign corporation on whom any process,
notice or demand may be served. Pursuant to the Arizona rules of civil procedure, service on the
commission of any process, notice or demand for an entity that is registered pursuant to this title shall be
made by delivering to and leaving with the commission duplicate copies of the process, notice or demand,
and the commission shall immediately cause one of the copies of the process, notice or demand to be
forwarded by mail, addressed to the foreign corporation at its known place of business. Service made on
the commission is returnable pursuant to applicable law relative to personal service on the foreign
corporation. If service is made on the commission, whether under this chapter or a rule of court, the
foreign corporation has thirty days to respond in addition to the time otherwise provided by law.
C. The commission shall keep a permanent record of all processes, notices and demands served on it
under this section and shall record in the record the time of the service and its action with reference to the
service.
D. Notice required to be served on a foreign corporation pursuant to section 10-11531 may be served:
1. By mail addressed to the statutory agent of the foreign corporation or, if the foreign corporation
fails to appoint and maintain a statutory agent, addressed to its known place of business in this
state or its principal place of business in its state or country of incorporation.
2. By electronic transmission to the statutory agent or to the corporation, or both.
3. Pursuant to the rules for service of process authorized by the Arizona rules of civil procedure.

Article 2 Withdrawal
10-11520. Withdrawal of foreign corporation
A. A foreign corporation authorized to conduct affairs in this state shall not withdraw from this state until
the commission files its application for withdrawal.
B. A foreign corporation authorized to conduct affairs in this state may apply to surrender the authority by
delivering an application to the commission for filing. The application shall set forth:
1. The name of the foreign corporation and the name of the state or country under whose law it is
incorporated.
2. That it is not conducting affairs in this state and that it surrenders its authority to conduct affairs
in this state.
3. That the foreign corporation revokes the authority of its statutory agent to accept service on its
behalf and appoints the commission as its agent for service of process in any proceeding based
on a cause of action arising during the time it was authorized to conduct affairs in this state.
4. A mailing address to which the commission may mail a copy of any process served on the
commission pursuant to its appointment as the foreign corporation's agent for service of process.
5. A commitment to notify the commission in the future of any change in the foreign corporation's
mailing address.
C. The application for withdrawal is not considered complete until the commission has received a notice
from the department of revenue to the effect that the tax levied under title 42, chapter 5, article 1 against
the foreign corporation has been paid or until it is notified by the department of revenue that the applicant
is not subject to the tax and further has received from the department of revenue its certificate issued
pursuant to section 43-1151.
D. The application for withdrawal is not considered complete until all fees, penalties and costs required to
be paid under this chapter have been paid.
E. After determining that the application appears in all respects to conform to the requirements of this
chapter and when all fees have been paid as are prescribed in this chapter, the commission shall file the

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application in the manner provided in section 10-3120. On the filing of the application for withdrawal, the
authority of the foreign corporation to transact business in this state ceases.
F. Within sixty days after the commission approves the filing, either of the following must occur:
1. A copy of the application for withdrawal shall be published. An affidavit evidencing the
publication may be filed with the commission.
2. The commission shall input the information regarding the approval into the database as
prescribed by section 10-130.
G. After the withdrawal of the corporation is effective, service of process on the commission under this
section is service on the foreign corporation. On receipt of process, the commission shall mail a copy of
the process to the foreign corporation at the mailing address set forth in its application for withdrawal.
H. Notwithstanding subsection D of this section, if an annual report becomes due on or after the first date
on which an application for withdrawal is delivered to the commission for filing, the annual report
requirement prescribed in section 10-11622 is suspended for a period of six months after the first date on
which the application for withdrawal is delivered to the commission for filing. On expiration of the sixmonth suspension, if the application for withdrawal is not approved for filing or if the authority of the
corporation to conduct affairs is revoked pursuant to section 10-11530, paragraph 10, all past due annual
reports required by section 10-11622, together with fees, are owed as if the suspension never occurred.
10-11521. Withdrawal by directors or members; foreign corporations
A. A majority of the directors or members of a foreign corporation that has not commenced conducting
affairs in this state may withdraw the foreign corporation by delivering to the commission for filing an
application for withdrawal that sets forth all of the following:
1. The name of the foreign corporation and the name of the state or country under whose laws it
is incorporated.
2. That the foreign corporation revokes the authority of its statutory agent to accept service on its
behalf and appoints the commission as its agent for service of process in any proceeding based
on a cause of action arising during the time it was authorized to conduct affairs in this state.
3. A mailing address to which the commission may mail a copy of any process served on the
commission pursuant to its appointment as the foreign corporation’s agent for service of process.
4. A commitment to notify the commission in the future of any change in the foreign corporation’s
mailing address.
5. That the foreign corporation has not conducted affairs in this state and that it surrenders its
authority to conduct affairs in this state.
6. That no debt of the foreign corporation acquired in this state remains unpaid.
7. That a majority of the directors or members authorized the withdrawal.
B. The application for withdrawal filed pursuant to this section must be executed pursuant to section 103120, subsection F.
C. After determining that the application appears in all respects to conform to the requirements of this
chapter and when all fees have been paid as are prescribed by this chapter, the commission shall file the
application in the manner provided in section 10-3120. On the filing of the application for withdrawal, the
authority of the foreign corporation to conduct affairs in this state ceases.

Article 3 Revocation of Certificate of Authority
10-11530. Grounds for revocation
The commission may commence a proceeding under section 10-11531 to revoke the authority of a
foreign corporation to conduct affairs in this state if any of the following conditions exist:
1. The foreign corporation does not deliver the annual report to the commission within the time
required by chapters 24 through 40 of this title.
2. The foreign corporation does not pay any fees or penalties imposed by chapters 24 through 40
of this title when they become due and payable.
3. The foreign corporation is without a statutory agent or known place of business in this state for
sixty days or more.

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4. The foreign corporation does not inform the commission that its statutory agent or its known
place of business has changed or that its statutory agent has resigned within sixty days after the
change or resignation.
5. The foreign corporation has failed to make any publication required by this title, provided the
commission has notified the foreign corporation of the intent of the commission to commence a
revocation proceeding for that reason and the foreign corporation has failed to file an affidavit or
other appropriate evidence of publication within sixty days after that notice.
6. An incorporator, director, officer or agent of the foreign corporation signed a document such
person knew was false in any material respect with intent that the document be delivered to the
commission for filing.
7. The commission receives a duly authenticated certificate from the secretary of state or other
official having custody of corporate records in the state or country under whose law the foreign
corporation is incorporated stating that it has been dissolved or disappeared as the result of a
merger.
8. The corporation has failed to file a certificate of disclosure or answer interrogatories as
prescribed in chapters 24 through 40 of this title.
9. Any officer or other representative of the corporation has made any misrepresentation of a
material matter in any application, report or other document submitted by the corporation
pursuant to chapters 24 through 40 of this title.
10. The corporation has failed to pay fees, penalties and costs required under this chapter or to
comply with section 10-11520, subsection F or the commission has not received the notice
required by section 10-11520, subsection C within six months after filing the application for
withdrawal.
10-11531. Procedure for and effect of revocation; reinstatement
A. If the commission determines that one or more grounds exist under section 10-11530 for revocation of
a grant of authority, the commission shall serve the foreign corporation with written notice of the
determination under section 10-11510.
B. If the foreign corporation does not correct each ground for revocation or demonstrate to the reasonable
satisfaction of the commission that each ground for revocation determined by the commission does not
exist within sixty days after service of the notice is perfected under section 10-11510, the commission
may revoke the foreign corporation's grant of authority by signing a certificate of revocation that recites
the ground or grounds for revocation and its effective date. The commission shall file the original of the
certificate and serve a copy on the foreign corporation under section 10-11510.
C. The authority of a foreign corporation to conduct affairs in this state ceases on the date shown on the
certificate revoking its grant of authority.
D. The commission's revocation of a foreign corporation's grant of authority appoints the commission the
foreign corporation's agent for service of process in any proceeding based on a cause of action that arose
during the time the foreign corporation was authorized to conduct affairs in this state. Service of process
on the commission under this subsection is service on the foreign corporation. On receipt of process, the
commission shall mail a copy of the process to the secretary of the foreign corporation at its principal
office shown in its most recent annual report or in any subsequent communication received from the
foreign corporation stating the current mailing address of its principal office, or, if none is on file, in its
application for authority.
E. Revocation of a foreign corporation's grant of authority does not terminate the authority of the statutory
agent of the corporation.
F. A foreign corporation whose authority is revoked pursuant to this section may apply to the commission
for reinstatement within six years after the effective date of the revocation. The application shall state
both:
1. The name of the foreign corporation and the effective date of the foreign corporation's
revocation of authority.
2. That the ground or grounds for the revocation either did not exist or have been eliminated.
G. If the commission determines that the application contains the information prescribed in subsection F
of this section and that the information is correct, the commission shall do all of the following:
1. Cancel the certificate of revocation.

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2. Prepare a certificate of reinstatement that states the determination and the effective date of the
reinstatement.
3. File the original of the certificate of reinstatement.
4. Serve a copy on the foreign corporation pursuant to section 10-11510.
H. After the reinstatement becomes effective, the reinstatement relates back to and takes effect as of the
effective date of the revocation, and the foreign corporation shall resume its business as if the revocation
had never occurred.
I. If the corporation has not applied for reinstatement within six months after the effective date of the
dissolution, the commission shall release the corporation name pursuant to chapters 24 through 40 of this
title or for use by a person intending to register the name as a trade name pursuant to title 44, chapter 10,
article 3.1. If another corporation has adopted the name of the foreign corporation or another person has
adopted the name of the foreign corporation as a trade name, the foreign corporation shall attach to the
application for reinstatement articles of amendment to application for authority and shall adopt a fictitious
name for use in this state that satisfies the requirements of sections 10-11504 and 10-11506.

Title 10, Chapter
CORPORATIONS

39

RECORDS

AND

REPORTS-NONPROFIT

Article 1 Records
10-11601. Corporate records
A. A corporation shall keep as permanent records minutes of all meetings of its members and board of
directors, a record of all actions taken by the members or board of directors without a meeting and a
record of all actions taken by a committee of the board of directors on behalf of the corporation.
B. A corporation shall maintain appropriate accounting records.
C. A corporation or its agent shall maintain a record of its members in a form that permits preparation of a
list of the names and addresses of all members and in alphabetical order by class of membership
showing the number of votes each member is entitled to cast and the class of memberships held by each
member.
D. A corporation shall maintain its records in written form or in another form capable of conversion into
written form within a reasonable time.
E. A corporation shall keep a copy of all of the following records at its principal office, at its known place
of business or at the office of its statutory agent:
1. Its articles or restated articles of incorporation and all amendments to them currently in effect.
2. Its bylaws or restated bylaws and all amendments to them currently in effect.
3. Resolutions adopted by its board of directors relating to the characteristics, qualifications,
rights, limitations and obligations of members or any class or category of members.
4. The minutes of all members' meetings and records of all actions taken by members without a
meeting for the past three years.
5. All written communications to members generally within the past three years, including the
financial statements furnished for the past three years under section 10-11620.
6. A list of the names and business addresses of its current directors and officers.
7. Its most recent annual report delivered to the commission under section 10-11622.
8. An agreement among members under section 10-3732.
F. Notwithstanding this chapter, a condominium association shall comply with title 33, chapter 9 and a
planned community association shall comply with title 33, chapter 16 to the extent that this chapter is
inconsistent with title 33, chapters 9 and 16.
10-11602. Inspection of records by members; applicability
A. Subject to subsections E and F of this section, any member who has been a member of record at least
six months immediately preceding its demand is entitled to inspect and copy any of the records of the
corporation described in section 10-11601, subsection E during regular business hours at the
corporation's principal office, if the member gives the corporation written notice of its demand as provided

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in section 10-3141 at least five business days before the date on which the member wishes to inspect
and copy.
B. Subject to subsections E and F of this section, a member who has been a member of record at least
six months immediately preceding its demand is entitled to inspect and copy any of the following records
of the corporation during regular business hours at a reasonable location specified by the corporation, if
the member meets the requirements of subsection C of this section and gives the corporation written
notice of its demand as provided in section 10-3141 at least five business days before the date on which
the member wishes to inspect and copy the following:
1. Excerpts from any records required to be maintained under section 10-11601, subsection A, to
the extent not subject to inspection under subsection A of this section.
2. Accounting records of the corporation.
3. Subject to section 10-11605, the membership list described in section 10-11601, subsection C.
4. The corporation's most recent financial statements showing in reasonable detail its assets and
liabilities and the results of its operations.
C. A member may inspect and copy the records identified in subsection B of this section only if the
following conditions are met:
1. The member's demand is made in good faith and for a proper purpose.
2. The member describes with reasonable particularity the member's purpose and the records the
member desires to inspect.
3. The records are directly connected with the member's purpose.
D. This section does not affect either:
1. The right of a member to inspect records under section 10-3720 or, if the member is in litigation
with the corporation, to the same extent as any other litigant.
2. The power of a court, independently of chapters 24 through 40 of this title, to compel the
production of corporate records for examination on proof by a member of proper purpose.
E. The articles of incorporation or bylaws of a corporation organized primarily for religious purposes may
limit or abolish the right of a member under this section to inspect and copy any corporate record.
F. Unless the board of directors has provided express permission to the member, a member of a
corporation that is a rural electric cooperative is not entitled to inspect or copy any records, documents or
other materials that are maintained by or in the possession of the corporation and that relate to any of the
following:
1. Personnel matters or a person's medical records.
2. Communications between an attorney for the corporation and the corporation.
3. Pending or contemplated litigation.
4. Pending or contemplated matters relating to enforcement of the corporation's documents or
rules.
G. This section does not apply to any corporation that is a condominium as defined in section 33-1202 or
a planned community as defined in section 33-1802.
H. This section does not apply to timeshare plans or associations that are subject to title 33, chapter 20.
10-11603. Scope of inspection rights; charge
A. A member's agent or attorney has the same inspection and copying rights as the member the agent or
attorney represents.
B. The right to copy records under section 10-11602 includes, if reasonable, the right to receive copies
made by photographic, xerographic or other means.
C. The corporation may impose a reasonable charge covering the costs of labor and material for copies
of any documents provided to the member. The charge shall not exceed the estimated cost of production
or reproduction of the records.
D. The corporation may comply with a member's demand to inspect the record of members under section
10-11602, subsection B, paragraph 3 by providing the member with a list of the corporation's members
that was compiled no earlier than the date of the member's demand.
10-11604. Court ordered inspection
A. If a corporation does not allow a member who complies with section 10-11602, subsection A to inspect
and copy any records required by that subsection to be available for inspection, the court in the county

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where the corporation's known place of business is located may summarily order inspection and copying
of the records demanded at the corporation's expense upon application of the member.
B. If a corporation does not allow within a reasonable time a member to inspect and copy any other
record, the member who complies with section 10-11602, subsections B and C may apply to the court in
the county where the corporation's known place of business is located for an order to permit inspection
and copying of the records demanded. The court shall dispose of an application under this subsection on
an expedited basis.
C. If the court orders inspection and copying of the records demanded, it shall also order the corporation
to pay the member's costs, including reasonable attorney fees, incurred to obtain the order, unless the
corporation proves that it refused inspection in good faith because it had a reasonable basis for doubt
about the right of the member to inspect the records demanded. The court may order a member to pay all
or a portion of the corporation's costs, including reasonable attorney fees, if the demand to inspect is
denied in whole or in material part.
D. If the court orders inspection and copying of the records demanded, it may impose reasonable
restrictions on the use or distribution of the records by the demanding member.
10-11605. Limitations on use of membership list; applicability
A. Without the consent of the board of directors, no person may obtain or use a membership list or any
part of the membership list for any purpose unrelated to a member's interest as a member.
B. Without the consent of the board of directors, the membership list or any part of the membership list
shall not be:
1. Used to solicit money or property, unless the money or property will be used solely to solicit the
votes of the members in an election to be held by the corporation.
2. Used for any commercial purpose.
3. Sold to or purchased by any person.
C. This section does not apply to timeshare plans or associations that are subject to title 33, chapter 20.

Article 2 Reports
10-11620. Financial statements for members
A. Except as provided in the articles of incorporation or bylaws of a corporation organized primarily for
religious purposes, a corporation on written demand from a member shall furnish that member its latest
annual financial statements that may be consolidated or combined statements of the corporation and one
or more of its subsidiaries or affiliates, as appropriate, and that include a balance sheet as of the end of
the fiscal year and statement of operations for that year. If financial statements are prepared for the
corporation on the basis of generally accepted accounting principles, the annual financial statements shall
also be prepared on that basis.
B. If the annual financial statements are reported on by a certified public accountant, that report shall
accompany them. If not, the statements shall be accompanied by a statement of the president or the
person responsible for the corporation's accounting records both:
1. Stating that person's reasonable belief whether the statements were prepared on the basis of
generally accepted accounting principles and, if not, describing the basis of preparation.
2. Describing any respects in which the statements were not prepared on a basis of accounting
consistent with the statements prepared for the preceding year.
10-11621. Report of indemnification to members
If a corporation indemnifies or advances expenses to a director under sections 10-3851 through 10-3854,
the corporation shall report the indemnification or advance in writing to the members with or before the
notice of the next meeting of members. Failure to report under this section does not invalidate otherwise
valid indemnification.
10-11622. Annual report
A. Each domestic corporation and each foreign corporation authorized to conduct affairs in this state shall
deliver to the commission for filing an annual report that sets forth all of the following:
1. The name of the corporation and the state or country under whose law it is incorporated.
2. The address of its known place of business and the name and address of its agent in this state.
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3. The address of its principal office.
4. The names and business addresses of its directors and principal officers.
5. A brief description of the nature of its activities.
6. Whether or not it has members.
7. A certificate of disclosure containing the information set forth in section 10-3202, subsection D.
8. A statement that all corporate income tax returns required by title 43 have been filed with the
department of revenue.
B. A unit owners' association that is subject to title 33, chapter 9 or a planned community association that
is subject to title 33, chapter 16 shall attach to and submit with the annual report a separate statement
containing the name of the designated agent or management company for the association, the address
for the association and the telephone number, e-mail address and website if any and fax number if any of
the association or its designated agent or management company. Unit owners' associations and planned
community associations shall file an amended statement reflecting changes in designated agent or
management company within thirty days of any change.
C. The information in the annual report and the separate statement that is prescribed by subsection B of
this section shall be current as of the date the annual report and separate statement are executed on
behalf of the corporation.
D. The annual report for all corporations shall be delivered to the commission for filing, and the annual fee
shall be paid on or before the date assigned by the commission. The commission may stagger the annual
report filing date for all corporations and adjust the annual fee on a pro rata basis. The corporation shall
deliver the annual report to the commission for filing each subsequent year in the anniversary month on
the date assigned by the commission. If a corporation is unable to file the annual report required by this
section on or before the date prescribed by this section, the corporation may file, but only on or before
this date, a written request with the commission for an extension of time, not to exceed six months, in
which to file the annual report. The request for an extension of time shall be accompanied by the annual
registration fee required by law. After filing the request for an extension of time and on receipt of the
annual registration fee, the commission shall grant the request.
E. If an annual report does not contain the information requested by this section, the commission shall
promptly notify the reporting domestic or foreign corporation in writing and shall return the report to it for
correction. If the report is corrected to contain the information required by this section and delivered to
the commission within thirty days after the effective date of notice, it is deemed to be timely filed.
F. Any corporation that is exempt from the requirement of filing an annual report shall deliver annually a
certificate of disclosure that contains the information set forth in section 10-3202, subsection D and that is
executed by any two executive officers or directors of the corporation on or before May 31. If the
certificate is not delivered within ninety days after the due date of the annual report or within ninety days
after May 31 in the case of any corporation that is exempt from the requirement of filing an annual report,
the commission shall initiate administrative dissolution of that corporation or revoke the application for
authority of that corporation pursuant to chapters 24 through 40 of this title.
10-11623. Statement of bankruptcy or receivership; interrogatories before subsequent
incorporation; violation; classification; definition
A. On the filing of a petition for bankruptcy or the appointment of a receiver for any corporation, the
corporation shall deliver a statement to the commission listing:
1. All officers, directors and trustees of the corporation within one year of filing the petition for
bankruptcy or the appointment of a receiver.
2. Whether any such person has been an officer, director or trustee of any other corporation
within one year of the bankruptcy or receivership of the other corporation.
3. If the answer in paragraph 2 of this subsection is in the affirmative, for each such corporation
the following information:
(a) Name and address.
(b) States in which it:
(i) Was incorporated.
(ii) Conducted affairs.
(c) Dates of operation.
B. The commission shall maintain a suitably indexed list of all such persons. The index shall be a public
record of the commission for purposes of title 39.
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C. On receipt of the articles of incorporation of a new corporation or application for authority to conduct
affairs by a foreign corporation, the commission shall determine whether any person, proposed as an
officer, director, trustee or incorporator of the new or foreign corporation has been involved two or more
times in a corporate bankruptcy, receivership, administrative dissolution, revocation or judicial dissolution
commenced by any state. If so, the commission shall direct detailed interrogatories to those persons
requiring any additional relevant information deemed necessary by the commission and at the same time
provide public notice of the interrogatory procedure. Any person may request additional interrogatories or
may provide additional information to the commission. The interrogatories shall be completely answered
within thirty days after mailing. With respect to corporations incorporated or seeking authority to conduct
affairs, articles of incorporation or application for authority shall not be filed until all outstanding
interrogatories have been answered to the satisfaction of the commission.
D. Any applicant for filing articles of incorporation authority to conduct affairs who is dissatisfied with a
determination of the commission or any other proceeding under this section may demand and the
commission or its designee shall convene a public hearing at the county seat of the county of the
corporate headquarters of the proposed corporation. The commission shall give public notice of the
hearing at least twenty days before the hearing by publication in a newspaper of general circulation in any
county in which a relevant prior bankruptcy or receivership occurred.
E. On a quarterly updated basis the commission shall provide the attorney general with a copy of
statements furnished pursuant to subsection A and answers to interrogatories propounded pursuant to
subsection C.
F. Any person or corporation failing to comply with the requirements of this section is guilty of a class 1
misdemeanor. Any person making a false statement or giving false information pursuant to this section is
guilty of a class 5 felony.

Article 3 Miscellaneous Provisions
10-11630. Certificate of good standing; license and registration renewal
If a state agency can confirm through the commission that an applicant for renewal of a license or
registration is entitled to the issuance of a certificate of good standing at the time of the inquiry, the
agency shall not require an applicant to obtain a certificate.
10-11631. Civil liability for false statements
A. If any report, certificate or other statement made or public notice given by the officers or directors of a
corporation is false in a material representation or if any book, record or account of the corporation is
knowingly or wrongfully altered, the officers, directors or agents knowingly or wrongfully authorizing,
signing or making the false report, certificate, other statement or notice or authorizing or making the
wrongful alteration are jointly and severally personally liable to a person who has become a creditor or
member of the corporation on the faith of the false material representation or alteration for all damages
resulting.
B. An action for the liability imposed by this section shall be commenced within two years after discovery
of the false representation or alteration and within six years after the certificate, report, public notice or
other statement or the alteration has been made or given by the officers, directors or agents of the
corporation.
10-11632. Interrogatory or signature violations; corporate records; classification
A. A person who knowingly fails or refuses within the time prescribed by this chapter to answer truthfully
any interrogatories propounded to that person by the commission in accordance with this chapter or who
signs any articles, statement, report, application or other document filed with the commission that is
known to the person as false in any material respect is guilty of a class 4 felony.
B. A person who with the intent to defraud or deceive knowingly falsifies, alters, steals, destroys,
mutilates, defaces, removes or secretes the books, records or accounts of a corporation is guilty of a
class 5 felony.
10-11633. Interrogatories by the commission
The commission may propound to any domestic or foreign corporation subject to chapters 24 through 40
of this title and to any officer or director of the corporation interrogatories as may be reasonably
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necessary and proper to enable it to ascertain whether the corporation complied with all of the provisions
of chapters 24 through 40 of this title applicable to the corporation. The interrogatories shall be answered
within thirty days after the mailing of the interrogatories or within an additional time fixed by the
commission, and the answers to the interrogatories shall be full and complete and shall be made in
writing and under oath. If the interrogatories are directed to an individual they shall be answered by the
individual, and if directed to a corporation they shall be answered by the president, vice-president,
secretary or assistant secretary of the corporation. The commission need not file any document to which
the interrogatories relate until the interrogatories have been answered as provided in this section, and not
then if the answers to the interrogatories disclose that the document is not in conformity with the
provisions of chapters 24 through 40 of this title. The commission shall certify to the attorney general, for
such action as the attorney general deems appropriate, all interrogatories and answers to the
interrogatories that disclose a violation of any of the provisions of chapters 24 through 40 of this title.
10-11634. information disclosed by interrogatories
Interrogatories propounded by the commission and the answers to the interrogatories shall not be open to
public inspection and the commission shall not disclose any facts or information obtained from the
interrogatories and answers except if its official duty requires the facts or information to be made public or
if the interrogatories or the answers are required for evidence in any criminal proceeding or in any other
action by this state.
10-11635. Certified copies received in evidence
All copies of documents delivered to and filed by the commission in accordance with chapters 24 through
40 of this title when certified by it shall be taken and received in all courts, public offices and official
bodies as prima facie evidence of the facts stated in the documents. A certificate by the commission
under seal as to the existence or nonexistence of the facts relating to corporations shall be taken and
received in all courts, public offices and official bodies as prima facie evidence of the existence or
nonexistence of the facts stated in the certificate.
10-11636. Civil liability for false or misleading filings; exceptions
A. Except as provided in subsection C or D of this section, any person that authorizes or signs a report,
certificate, notice or other document with respect to a corporation that is delivered for filing with the
commission pursuant to this chapter and that has knowledge at the time of delivery to the commission for
filing that the information contained in that report, certificate, notice or other document is materially false
or misleading is liable to the corporation and its creditors for all damages resulting from the act. The
prevailing party in an action for the liability imposed under this subsection is entitled to an award for the
prevailing party's costs and reasonable attorney fees.
B. An action for the liability imposed by subsection A of this section must be commenced within two years
after the discovery of the false or misleading statement or the time a reasonable person would have
discovered it, but not later than six years after the report, certificate, notice or other document was filed or
received by the commission.
C. Execution of a consent to serve as a statutory agent does not by itself constitute a certification of the
truth or accuracy of the information contained in a report, certificate, notice or other document with
respect to the corporation even if the consent is attached to another filing.
D. This section does not prevent the award of equitable remedies, if appropriate.

Title 10, Chapter
CORPORATIONS

40

TRANSITION

PROVISIONS-NONPROFIT

Article 1 General Provisions
10-11701. Application to existing domestic corporations
A. Except as provided in subsection B, chapters 24 through 40 of this title apply to all Arizona
corporations that were incorporated under or that were subject to chapter 22 of this title on December 31,
1998.
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B. Any existing corporation that was originally organized under the laws of the territory of Arizona may
elect to amend or restate its articles of incorporation and retain any previously valid provisions of its
articles of incorporation, even if the previously valid provisions of its articles of incorporation are in conflict
with any provisions of chapters 24 through 40 of this title. Upon such amendment or restatement, all of
the provisions of chapters 24 through 40 of this title which are not specifically in conflict with the amended
or restated articles of incorporation shall be applicable to the existing corporations that were originally
organized under the laws of the territory of Arizona. The previously valid provisions of its articles of
incorporation that are retained shall apply to the existing corporations originally organized under the laws
of the territory of Arizona and to all persons contracting or in any manner dealing with the corporation,
including its members, subscribers, affiliates, directors, officers and employees.
10-11702. Application to qualified foreign corporations
A foreign corporation authorized to conduct affairs in this state on January 1, 1999 is subject to chapters
24 through 40 of this title but is not required to obtain a new grant of authority to conduct affairs under
chapters 24 through 40 of this title, except as provided in section 10-11504.

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