If I am semi-retired and don't use my license often, do I have to complete this form?
If your license is active with the Department of Real Estate and you are a Designated Broker, you are required to complete the Audit
Declaration Form. It does not matter whether or not you are conducting any real estate business. In this case, most of the
answers will be "N/A".
How do I determine the difference between a "No" answer and a "N/A" answer?
A "No" answer means you are not in compliance with Arizona Revised Statutes and/or Commissioner's Rules. A "N/A" answer means that
section does not apply to you or to your brokerage. You are required to explain any "No" answers on page 9 of the Audit Declaration
Form. A proper explanation should tell an auditor how and why you are not in compliance.
Am I supposed to submit my Audit Declaration Form with my Broker's License Renewal or Employing Broker's (entity)
License Renewal?
The Audit Declaration Form is due prior to or with the Designated (including Self-Employed) Brokers License Renewal. It is not due
with the entity (Corporation, Partnership, LLC) license renewal.
If I change my license from a Designated Broker to an Associate Broker, am I still required to submit the Audit
Declaration Form?
No. The Audit Declaration Form is only a requirement for Designated Brokers.
Do I have to scan and e-mail the Audit Declaration Form?
The completed Audit Dedaration may be mailed, faxed, scanned, e-mailed or hand-carried. It may also be sent to the ADRE's Phoenix
or Tucson offices by mail.
May I include the Audit Declaration Form with my renewal application and fees?
Yes. If you choose to send them together, they must be addressed to the Licensing Division. The Licensing Division will then
route the Audit Declaration Form to the Auditing Division.
On page 6 of the "Broker Supervision & Control" section, if I have no licensees, do I still need a Broker
Supervision Policy?
Yes.* The Broker Supervision Policy manual is a requirement. If you have no employees or licensees and minimal activity,
the manual will not need to cover as many of the required areas. The manual will need to address the areas that do apply, such as
filing, storing and maintaining transactions, and the handling of funds.
* A planned rule change is expected to exempt a broker with no or few employees. Additional rule changes may also occur and will be reported in future Bulletins.
What is Property Management?
Property Management constitutes a special branch of the real estate business that consists of the operations, supervision and execution
of management policies pertaining to a given property. A property managers' basic purpose is to provide the client-owner the
highest possible continuous net return from the property consistent with the best use while, at the same time, providing the tenants the
best possible service and value for the rent.
Do I need a Real Estate License to do Property Management?
Yes. A Real Estate license is required to perform property management functions, per ARS 32-2171. "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 for compensation.
During the term of the lease, who's property is the security deposit?
The deposit belongs to the (Lessee). The lessor (or the lessor's agent) holds the security deposit for the lessee pending full
performance of the lessee's obligation under the lease.
Is rent paid in advance or in arrears?
Rent is paid in advance, unless otherwise specified in the lease or in state law.
What should be done to document a property management agreement?
The real estate agency's involvement in the transaction is defined in the property management agreement, which must be clear and state
all terms and conditions of the broker's services, be signed by the broker and not be assigned to another licensee without express
written consent of the property owner (ARS 32-2173(A)).
May the broker list properties without having a signed management agreement?
A property management firm must state all material terms and conditions of the property management firm's services, obligations, duties
and responsibilities to the owner (ARS 32-2173(1) (A) (a)). The department does not regulate the multiple listing services agencies
or the documentation they require to perform their services. Therefore, if an Auditor finds that the owner signed authorization for
the BROKER to list the properties, and the BROKER does so, then the activity is in compliance with ARS 32-2173 (A) (1)(a) - if the Broker
does not make any misrepresentation or false statement in the process.
Must the designated broker review all rental agreements?
The Designated Broker is not required to review and initial fully executed residential lease agreements (ARS 32-2173 (A)). The
designated broker or designee must sign all non-residential rental agreements, and therefore need not initial a review of them.
What jurisdiction does the Department exercise over landlord-tenant disputes?
The department has no jurisdiction over landlord and tenant disputes (ARS 32-2160)). The department has no policy relative to
whether the broker must disclose his agency status to a tenant.
Who is responsible for supervising property management employees?
An employing broker is responsible for all acts of associate brokers, salespersons and other agents of the brokerage, and the designated
broker must supervise the employing broker, the associate brokers, salespersons and other agents of the employing broker
(AAC R4-28-1103(C)(D)). No salesperson or associate broker may conduct property management if the broker does not supervise the
activity (AAC R4-28-302(J)).
What name may the property manager operate under?
The department does not license employing brokers under more than one dba name, and business cannot be conducted or promoted under any
other name (AAC R4-28-302(I)).
How should payments from tenants be handled?
ALL OWNER'S MONIES must be deposited to the BROKER'S TRUST ACCOUNT within three banking days, albeit the designated broker can authorize
his licensee or his direct employee to be signatories on the account, this DOES NOT LESSEN THE BROKER"S RESPONSIBILITY OR LIABILITY FOR
ANY MONIES (ARS 32-2174(B)(C)(D)).
What controls must the broker have over a property management trust account?
All property management accounts must be the Brokers' TRUST ACCOUNTS (ARS 32-21774(A)(B)). Deposits must be by deposit slips with
documentation identifying each transaction, the date, amount and names of parties involved. The Broker must maintain a descriptive
receipt and disbursement journal and client ledger(s) for each account (ARS 32-2151(B)). The department does not require the Broker
to maintain more than one trust account; but does require that any and all trust accounts be in compliance with statute. The Broker
may choose to move money from one BROKER TRUST ACCOUNT to another BROKER TRUST ACCOUNT, as long as the journals and ledgers for each
account are in compliance with GAAP and statute.
What is a finder fee?
A "finder fee" means a fee paid to a person for introducing or arranging an introduction between parties to a transaction involving
rental of an apartment.
Who may be paid a finder fee?
Notwithstanding sections 32-2155, 32-2163 and 32-2165 or other provisions, a property management firm or a property owner:
Must the property owner have a license to manage property?
"Property owner" means a person who is exempt from the licensing requirements of this chapter pursuant to section 32-2121(A)(1).
Must the "residential leasing agent or manager" of the owner's property be licensed?
The "Residential leasing agent or manager" must have a license if they perform property management activities at more than one location
during a workday or if they receive special compensation for their services ARS 32-2121(A)(6).
Key words in Property Management
I am a designated broker and will be out of the office for several days due to vacation / illness. Do I need
to tell the Department?
When a designated broker will be temporarily absent or unavailable (30 days or less), the broker can designate another licensee in the
broker's employ, or another designated broker, to act on the broker's behalf. The broker operating under a temporary delegation of
authority who signs a licensed employee's renewal application, or a hire or sever form, on behalf of the absent broker, must attach a
copy of the delegation letter to the application, hire or sever before filing it with the Department.
Please DO NOT faxed a copy of the broker's delegation of authority to the Department unless you are requested to do so by a Department representative. Please DO attach a copy when signing on behalf of the designated broker during the broker's temporary absence of 30 days or less. See A.R.S. § 32-2127 and R4-28-303 E (12).
rev. 04/07