Have you heard about SB 1218? If you are regularly involved in real estate transactions, you must stay aware of changes in real estate issues in Arizona, including the new legislation that affects real estate listing contracts. An Arizona real estate lawyer at Provident Law® can ensure you receive legal updates and understand how they affect your real estate investments. Here are the most important details you should know about SB 1218.
What is Senate Bill 1218?
Senate Bill (SB) 1218 is a set of new Arizona statutes – A.R.S. §§44-501, 502, and 503. All three statutes fall under the heading of “Exclusive Property Engagement Agreements.” SB 1218 establishes various unlawful practices concerning exclusive residential real estate listing agreements.
When Does SB 1218 Take Effect?
SB 1218 takes effect on September 14, 2024.
What is an Exclusive Property Engagement Agreement?
Under A.R.S. §44-501, an exclusive property engagement agreement is “a contract or agreement that provides an exclusive right to a person to list or sell Residential Real Estate.”
What is Residential Real Estate?
Residential Real Estate is real estate that “is used or will be used primarily for a personal, family or household purpose and that contains fewer than five dwelling units.” Regrettably, per the author’s communications with the Arizona Real Estate Commissioner, this definition includes new home construction, not withstanding that the construction process often takes at least six to twelve months to complete.
What Are Unlawful Practices Concerning Exclusive Property Engagement Agreements SB 1218?
A.R.S. §44-502 prohibits an Exclusive Property Engagement Agreement concerning Residential Real Estate from:
- Lasting any longer than 12 months from the date the agreement is signed;
- Being a covenant that runs with the land;
- Binding a future owner unless the future owner acquires an interest in the property after listing services have started, and a broker has a ready, willing, and able purchaser for the Residential Real Estate;
- Being recorded in the office of a County Recorder;
- Authorizing an individual to place a security interest or lien against the property or otherwise encumber the property; or
- From being assigned without notice to and the agreement of the owner.
Exclusive Property Engagement Agreements are only possible if listing services begin within 180 days of the date that the parties sign the agreement.
Courts may not enforce any Exclusive Property Engagement Agreement concerning Residential Real Estate made or recorded in violation of this statute. Likewise, any unlawful agreement recorded with a County Recorder’s Office is void and unenforceable.
What Can Consumers Do If They Believe Their Exclusive Property Engagement Agreement Concerning Residential Real Estate is Unlawful Under SB 1218?
Consumers who believe that their Exclusive Property Engagement Agreement concerning Residential Real Estate is unlawful under SB 1218 can take private legal action to hold those violating these statutes accountable. Victims of consumer fraud can also file complaints with the Arizona Attorney General’s Office, which can take legal action against the offending party. Individuals who violate these statutes are subject to liability and penalties under A.R.S. §33-420.
Contact Us Today for Help with Your Real Estate Law Issues in Arizona
The real estate lawyers at Provident Law® have over 200 years of combined legal experience. We aim to build a relationship with you and our clients as we work with you through your most complex legal problems. Call us today at (480) 388-3343 or contact us online to see what we can do for you.