Arizona Real Estate: Ethics and Property Management – Flashcards
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State regulated fund used to pay purchasers of real estate who have suffered a loss due to actions or inactions of liscensee
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Recovery fund
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Act that prohibits discrimination against race and color
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Civil Rights Act of 1866
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Act that prohibits discrimination against race, color, religion, national origin, familial status, and handicap
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Federal Fair Housing Act 1968
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Act that ensures fairness in the marketplace
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Sherman Antitrust Act
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Act which requires full disclosure of all cost involved in obtaining financing and closing on a property
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Real Estate Settlement Procedures Act (RESPA)
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Advertisements placed by a sales agent that do not include the employing broker's name
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Blind Ads
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Making the sale of the first product contingent on the sale of second
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Tie in arrangement - prohibited by the Sherman Antitrust Act
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Penalties for Sherman Antitrust Act
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Maximum $100000 fine and 3 years prison
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Recovery Fund payments
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$10 sales agent $20 broker paid in when license obtained; additional $10 sales agent $25 broker upon renewal if fund goes below $600000
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Recovery Fund benefits
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Licensee or spouse cannot gain from fund. Intended for purchaser.
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Recovery Fund time limit
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5 years to file claim
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Recovery Fund monetary limits
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$30,000 max an individual can collect $90,000 max paid out for licensee
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Recovery Fund Penalty
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Loss of license. If commissioner approves license can be returned if fine plus interest is paid.
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Realtor Code of Ethics
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17 articles and standards of practice required by members of NAR to follow. Determined by RE industry
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Process for Violations of RE Code
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1. File complaint within 180 days of known violation - general public or Realtor 2. Reviewed by Grievance Committee 3. Professional Standards Hearing
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Arbitration
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Article 17 of Code requires Realtors to arbitrate rather than litigate. Usually regarding commission disputes between brokers.
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Use of terms "team or group" in ads
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Broker may use either term if ad does not refer to a trade name. Must refer to real estate agents or broker. All employed by same broker. List of members available for ADRE.
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Subdivision Ads
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Must never say "recommended by RE Commissioner" or "no risk"
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Comprehensive Loss Underwriting Exchange (Clue Report)
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Allows insurance company 5 years of property history. Allowed access by Fair Credit Reporting Act. Only insurance and owners can order report.
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New Home Builder Warranties
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Required to provide 1 year. 2 year on mechanical equipment.
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Responsibility of New Homes Agent
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Homes built without contractor license may not be listed for 1 year. Must disclose knowledge of latent defects - up to four years from close. Must use due diligence and disclose red flags.
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Created for regulating the relationship between landlord and tenant in residential leases
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Uniform Residential Landlord and Tenant Act of 1973
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A contract between a lessor and a lessee that transfers the right to exclusive possession and use of the property for a specified period of time in exchange for rent
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lease
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Landlord
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lessor
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tenant
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lessee
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Transferring part of a lessee's interest to another for a portion of the term of the lease
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subletting
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The legal process that results in the tenant being physically removed from the leased premises
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Actual eviction
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Actions of a landlord that disturb or impair a tenant's enjoyment of the leased premises and causes him to leave
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Constructive eviction
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When the right and interest in a property is transferred to another for the entire term
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assignment
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The landlord's legal right to seize a tenant's belongings for damages or rents in arrears under court order
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Distraint (illegal in AZ)
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A privately owned entity that provides services or accommodations to the public
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Public accomodation
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The right to take back possession of a property if lease ends
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Reversionary rights
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Property Manager
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Must hold license if managing 2 or more properties for someone else.
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Certified Property Manager (CPM)
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Designation given by Institute of RE Management
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Property Manager Duties
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Achieve owner's objectives: generate income, preserve value of property, secure suitable tenants, collect rents, care for premises, payments and disbursement funds, monthly reports of income and expenses
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Rental Agreements
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Must be kept for 1 year from expiration date
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Property Management Classifications
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Residential, Industrial, Commercial, Special Purpose
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Commercial Property Managers
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Must comply with ADA. If property has < or = 25 employees, ADA covers hiring employees interviewing potential tenants.
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Management Contract
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Between owner and broker. Names parties involved, street address - informal reference.
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Terms of Management Contract
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Specify terms of management; specify agents power to hired, fire and supervise; specify authority to rent, operate and manage the premises; beginning and end date; contain termination provision; frequency of profit, loss, and reporting.
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Finder's fee
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Can't exceed $200, can't exceed 5 x in a 12 month period, credit toward rent.
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Termination of Property Manager
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Immediately provide copies of all rental agreements. Within 5 days provide list of tenant security deposits. Within 35 days provide reimbursement of all monies remaining in property accounts except unpaid obligations, within 75 days provide final accounting of all monies including bank reconciliation.
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PM Financial records
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Kept for 3 years from execution date
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PM agreements
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Kept for 5 years from termination
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Residential leases
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Kept for the earlier of 1 year from termination of the lease or until turned over to the owner at termination of the property management agreement.
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Nonresidential leases
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Kept in individual folders and must contain documented trail of money and lease agreement.
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Fully executed residential lease agreements
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Not required to be reviewed and initialed by broker
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Records kept
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On site or off site if ADRE is notified in writing of address
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Uniform Residential Landlord and Tenant Act of 1973
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48 hours notice to enter premises, tenants liable for guests actions, no more than 2 persons per bedroom, tenant must know rules at signing, reversionary rights retained by landlord.
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Rental Properties
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80% or more of income is from dwelling units, must be registered with county, Non-resident owners must appoint statutory agent
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Lease
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Statute of Frauds applies except for 1 year or less
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Contract Rent
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The rental amount on the lease contract
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Economic Rent
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The rental amount that the current market is demanding
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Gross Lease
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Tenant pays fixed rent; landlord pays taxes, insurance, mortgage, repairs etch. Most commonly used for residential properties
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Net Lease
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Tenant pays rent and most of all property charges. Generally used for commercial or industrial properties and long term
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Ground Lease
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Also called land lease; leasing land alone; used to separate ownership of land from building; usually 99 year lease
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Percentage Lease
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Lessee pays a percentage of his income in addition to gross or net lease; usually retail operation
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Lease Option (unilateral contract)
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First right of refusal - gives tenant right to purchase property. Runs with land, no extension beyond term of lease, consideration can be rent, delinquent rent payment can result in end of option, can be assigned separately
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Sale and Leaseback
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Owner sells property on market and then leases it back
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Graduated Lease
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Rent payments start at a fixed rate but increase at set intervals during lease term - often used for commercial or tough economy.
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Index Lease (escalation)
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Rent adjusts according to changes in price index - often consumer or wholesale price index
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Valid Lease Components
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Legal ability to enter contract, legal purpose, offer and acceptance, signatures or lessor and lessee, consideration - rent, property description, term of lease clearly labeled
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Divorce
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Spouse does not need to sign lease
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Month to month lease
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30 day notice to cancel agreement
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Landlord can change property rules
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30 day notice to tenants
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Exemptions from Landlord and Tenant Act
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Mobile Homes, public housing, hotels, fraternity, sorority, dormitory
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Move in inspection notice
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Tenant has 5 days after occupancy to fill out return to landlord.
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Upon move in tenant must be given
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Name and address of property, notice where to obtain Landlord Tenant Act, Inspection form, Pool safety notice, Lead based paint disclosure, bed bug ed materials
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Bedbug Ed materials
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Disclose w/in 3 business days, inspect within 7 business days, 7 business days within evidence to start treatment, 3 days notice before treatment at landlords expense
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Move out inspection
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May apply deposit to rent or damages, itemized list of damages, remaining deposit returned within 14 business days. If not returned tenant has right to recover up to twice amount wrongfully held.
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Breach
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violation of any of the terms of the agreement without legal excuse
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Constructive eviction
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Landlord has 10 days from notice to fix problems unless affecting health and safety and then 5 days. Tenant can repair property and be reimbursed up to $300 or half rent whichever is greater.
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Actual Eviction
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5 day notice, tenant forced to move out, distraint illegal
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Skip/Abandonment
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Tenant moves out w/out notice or payment of rent, destruction or condemnation, death does not terminate, mutual agreement, expiration of lease, tenant convicted of a crime or is victim of domestic violence.
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Security Deposits
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One and one half month's rent
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Security Deposits as trust money
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Can be interest bearing, must identify where interest goes, broker may have up to $3,000 of own money in account, signers can be any employee/agent under the broker
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Lessor Defaults/Foreclosure
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Non disturbance clause, assignment of rents clause
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Non disturbance clause
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Tenant cannot be disturbed if there is foreclosure on lessor
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Assignment of rents
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Allows lender to collect rent if lessor defaults on loan.
