32-2186. Real estate recovery fund; liability limits; definitions

589 words·~3 min read·/az/title-32/32-2186

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

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.

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.