Did you know that...

Licensees are reminded that
Commissioner’s Rule R4-28-301(F) requires
that any licensee who is convicted of any
misdemeanor or felony offense must
disclose in writing that conviction to the
Department within TEN (10) DAYS of the
date of the conviction. The date of the
conviction occurs when the Defendant
pleads guilty to the offense or is found
guilty of the offense. The Department
takes any violation of this disclosure Rule
very seriously.
• Are you conducting unlicensed activity?
(See article on page 10)

B u l l e t i n

Dec/Jan. 2006
Volume 31-Issue 5

•

Inside this issue:

Arizona Department of Real Estate

T h e

REMINDER: CONVICTIONS MUST BE
DISCLOSED!

Did You Know That...

1

Kudos for ADRE

2

Commissioner’s Corner

3

Real Estate Complaints on Increase

4-5

Eminent Domain

6-7

License & Prof. Education Division

7-8

Subdivision Report

8-9

Investigation Yearly Review

9-`0

Did You Know...Unlicensed Activity?

10

When is a Subdivision Report Required

11

Administrative Actions

12-14

Our Mission
The mission of the
Department is to protect
the public interest
through licensure and
regulation of the real
estate profession in the
State of Arizona.

ADRE EMPLOYEE
Highlights
Cindy Wilkinson
Licensing and Professional Education Division Director Honored by Governor
An Arizona native, Cindy Wilkinson has worked for 28 years in State Government service and 25 years with the Arizona Department of Real Estate. Cindy has a tremendous amount of institutional knowledge, skills and experience with
ADRE based on her varied responsibilities over the years, including:
•

•
•
•

Currently Director of the Department's combined Licensing and Professional Education Division. In this capacity Cindy has responsibility to oversee 18 employees, 76,346 licensees, 171 real estate schools, 2,500
courses as well as 1,300 instructors. Her division received 17,000 phone calls in October alone as well as
1,200 new applicants also in October.
Prior Deputy Director of the ADRE's Administrative Actions Division .
Prior Director the Customer Services Division.
Rules Liaison for the ADRE.

Recently Cindy suggested sending licensees pink postcards in lieu of a 4-part renewal application as license renewal
reminders, encouraging use of the On-Line Renewal System. This has saved postage, printing, paper, as well as countless hours for licensees and staff. It is an on-going savings.
Cindy is admired and well respected by her colleagues as well as other professionals in the real estate industry. She is
an integral part of the management team and is instrumental in ensuring that the ADRE runs smoothly on a day-to-day
basis.
Cindy was honored with special recognition by the Governor at the December 2005 Cabinet Meeting.
Just Ask Carla!
BY
Mary C. Utley, Editor
As many of you can attest to, Carla Randolph, Commissioner’s Assistant,
is an invaluable resource to the Department. She has been with ADRE
since 1985 and is knowledgeable on nearly every aspect of ADRE.
Despite being inundated with phone calls and requests, she always manages to have a smile and a positive attitude. Not only is she the Commissioner’s Assistant, she is also the Department’s Ombudsman. As the
Commissioner’s Assistant, she has duties that vary and keep her hopping
every minute of the day.

Carla Randolph

VOLUME 31-ISSUE 5

In addition to her busy days, two precious daughters and a husband keep
her busy at home. Our question to Carla is “HOW DO YOU DO IT?”

Page 2

By Commissioner Elaine Richardson

Recently I was asked, “Since becoming Commissioner, have
you created more work?” What I was really being asked was
had I added to the “bureaucracy maze.” I did not have to
think about the response for very long. My answer was
“exactly the opposite”! Of course, I was asked to provide
some examples. I did not hesitate to give examples where we
have actually “streamlined” the processes at the Department.
When I say streamline, I don’t mean cutting corners or
providing an inferior work product.

•

•

•
•

Here are some of the examples:
• Online License Renewal System-has eliminated the
need for licensees to travel to the Department, making it
more cost-effective and timesaving for both the licensees
and the Department.
• Pink Card-renewal reminder instead of the four-part
renewal form; saves Department money in postage,
printing, paper and staff time.
• Department’s website -more user-friendly. Easier
access to Subdivision Public Reports (saving staff and
industry time); Real Estate Law Book (more manageable)
available on web as are the complaint forms, link to the
Sonora Agent Registry (providing additional information to
Arizona consumers seeking to purchase property in
Mexico).
• Customer Assistance Team (C.A.T. Team)-created to
provide consistency in responses as well as avoid having
the caller being “ping ponged” from one person to another.
• Late Breaking News-re-instituted to provide more
effective communication and keep licensees updated.
• Stakeholder’s Meetings-a vehicle for licensees and
industry to provide feedback to the Department as well as
expertise on matters directly affecting them. Those groups
are: Education Advisory Committee, Subdivision Task
Force, Cross-Borders Transactions Committee and
Industry Stakeholders (which resulted in consensus
legislation).
• Automated Body Fluid Testing-time and cost saver for
ADRE Compliance Officer. Paid for by the “provisional”
licensees-not the Department or taxpayers.
VOLUME 31-ISSUE 5

•
•

Arizona Real Estate and You-A Consumer Guide-a
quick and easy to understand reference (available in
English and Spanish) for consumers considering buying or
selling property.
Broker Audit Declaration-a self-audit for the brokers
resulting in more audits being accomplished without
increasing auditing staff.
Billing for Subdivision Inspections-method shortened thus
saving time and generating revenue for the Department.
Licensing Division Reconfigured-open cubicles for staff
creating a more open and effective working environment.
Utilization of Cease and Desist Orders-provide protection
for buyers and sellers.
Streamlined Subdivision Public Report Processdevelopers in Mexico who market to Arizona consumers
can apply for a Public Report and obtain one in a timely
manner while saving financially. The consumer continues
to be protected.

The Department continued to be effective, productive and
focused on cost-saving in 2005 despite having staff shortages.
As is frequently heard in the halls of the Department-we are
dancing as fast as we can!
We are looking forward to continued progress in 2006 and
remain committed to the licensees, industry and
the public.

Page 3

Real Estate Advertising Complaints on the Increase
By
Tom Adams, Director, ADRE Investigations Division
K. Michelle Lind, AAR General Counsel

The Arizona Department of Real Estate (“ADRE”) receives
numerous advertising complaints each month. The ADRE
investigates advertising complaints and takes action against
those licensees whose advertising violates the ADRE
Commissioner’s Rules, so it is important to be familiar with
the advertising laws and ensure that your advertising is in
compliance.
Advertising is broadly defined and highly regulated.
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 [property] and any
photographs, drawings or artist's presentations of physical
conditions or facilities existing or to exist on the property.” A.
R.S. §32-2101(2). Nearly anything salespersons or brokers
do to circulate their names among people, other than “keep
in touch” or “thank-you” items such as gifts or birthday cards
to clients, falls under the definition of advertising.
The Commissioner’s Rules, A.A.C. R4-28-502, set forth the
rules for all advertising. A salesperson or broker acting as
an agent is prohibited from advertising property in a manner
which implies that no salesperson or broker is taking part in
the offer for sale or lease. The designated broker must
supervise all advertising, however, associate brokers and
salespeople are responsible for insuring that their
advertising is in compliance with the Rules.
The employing broker’s name must be “clear and
prominent” in all advertising.
All advertising must identify in a “clear and prominent
manner the employing broker's legal name or the licensed
dba name.” The employing broker is the corporation, limited
liability company, partnership or sole proprietorship licensed
as a broker that has engaged the services of salespersons
and associate brokers. The employing broker designates a
natural person to act as the designated broker.
The requirement that all advertising identify the employing
broker’s name in a “clear and prominent manner” is by far

VOLUME 31-ISSUE 5

the most common subject of complaints. Although the Rules
do not specify precisely what constitutes “clear and
prominent,” Webster defines prominent as “thrusts itself into
attention” or “conspicuous in position or importance.” A
primary guideline to consider when creating an
advertisement is that the employing broker represents the
client in the transaction and the associate broker or
salesperson represents the employing broker. This
relationship must be indicated in the advertisement; that is,
the ad must be clear that the employing broker is involved in
the process. Consider the following guidelines:
•

•

•

•

•

The employing broker’s name must be included in all
newspaper advertisements, including classified ads, real
estate advertising guides, and other magazine ads.
·In advertising flyers, the employing broker’s name may
be located on either the top or the bottom of the flyer
however the employing broker’s name must be clearly
legible.
·On any other promotional material the employing
broker’s name must be on the front page or front of the
object.
·The employing broker’s name must be spelled out in its
entirety. For example, if an employing broker’s legal or
dba name on a license includes “Southeast Valley,” that
is what must appear in the ad; simply saying “SE” is not
sufficient.
·If the brokerage is an office of a franchise, the office
must be identified; simply displaying the franchise name
alone is not sufficient.

The employing broker’s name must be on each page of
an associate broker or salesperson’s web site.
Web sites or emails that target Arizona residents with the
offering of a property interest or real estate service also
constitute advertising and is a regulated activity. A.R.S. §322163(D) and A.A.C. R4-28-502(L). The employing broker’s
name must be visible on the first page of the web page,
without the necessity of scrolling down, regardless of the
screen size of the computer. Web pages should identify the
broker on each page because it is possible to link to a single
page and, if that is done, the broker’s name needs to be

Page 4

Real Estate Advertising Complaints on the Increase
Continued from page 4
to be visible. In contrast, if the employing broker produces a
magazine that includes only the broker's listings, the broker
can be identified on just the front cover, not every page,
because a consumer picks up the whole magazine, not just
one page.
Teams must comply with the same advertising rules
A real estate salesperson or broker may use the terms "team"
or "group" to advertise and promote real estate services if the
team or group is comprised of licensed real estate
salespersons or brokers who are employed by the same
broker. When advertising as a team, the same advertising
rules apply as when advertising as an individual broker or
salesperson. All team advertising must identify the employing
broker in a clear and prominent manner. For example, placing
“The (Team Name) Team” at the top of the page in large
letters with a much smaller brokerage symbol somewhere
below (often at the bottom of the page) is not sufficient. The
ad must be clear that the team is a part of the brokerage.
Other Advertising Rules
In addition, the Rules also require that:
•

All advertising must contain accurate claims and
representations, and fully state factual material
relating to the information advertised.

•

The licensee’s name must be set forth in a manner
that would enable a consumer to find the licensee’s
license information on the ADRE's records (including
website). A.A.C. R4-28-302 (I).

•

Licensees advertising their own property for sale must
place the words "owner/agent" in the advertisement.

•

A licensee who advertises property that is the subject
of another’s listing must display the name of the listing
broker in a clear and prominent manner. Prominent is
determined by the criteria discussed above.

•

The term “acre,” either alone or modified, may be
used only if referring to an area of land representing
43,560 square feet.

VOLUME 31-ISSUE 5

Advertising Rule violations result in ADRE sanctions
When the ADRE determines that an advertisement is in
violation of the Rule, the ADRE will hold both the salesperson
or associate broker and the broker responsible. Penalties for
advertising violations can include monetary fines, suspension
or revocation of a license, denial of the issuance or renewal of
a license, issuance of a Letter of Concern or issuance of a
provisional license. The ADRE will often first issue both the
salesperson or associate broker and the broker a Letter of
Concern, which will be placed the salesperson’s and broker’s
file. A "Letter of Concern" is 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 disciplinary action
against the licensee. A.R.S. §32-2153(F)(1). Further
violations will generally result in disciplinary action, with the
Letter of Concern as part of the evidence indicating the
licensee was made aware of the violation and supporting the
discipline.
Tip: The ADRE is interested in obtaining compliance, not in
initiating discipline. Take an extra few minutes to review your
advertisements to ensure they meet the requirements of the
law. If you have any questions about the legality of your
advertising, contact your broker or the ADRE for guidance. If
you have any questions about the legality of your advertising
on the Web, the ADRE will review it for compliance. Email
Tom Adams at tadams@re.state.az.us and include your link,
ad copy or URL.
Editor’s Note: Tom Adams is the Director of the
Investigations Division of the Arizona Department of Real Estate.
Michelle Lind is General Counsel to the Arizona Association of
REALTORS® (“AAR”) and a State Bar of Arizona board certified
real estate specialist.
This article is of a general nature and may not be updated or
revised for accuracy as statutory or case law changes following the
date of first publication. Further, this article reflects only the opinion
of the author, is not intended as definitive legal advice and you
should not act upon it without seeking independent legal counsel.

Page 5

Eminent Domain…Inherent Rights …Constitution?
By Samuel Aubrey

As your lobbyist, I take great pride in the opportunity I have to
protect and ensure the continuation of your rights through communication and dialogue with those elected to uphold the U.S.
and Arizona Constitutions. As a result of this effort and that of
many of you—through your commitment of time and resources,
we enjoy the benefits derived from a thriving and robust real estate market unencumbered by unnecessary and burdensome
laws.
My gratitude comes in the form of encouragement to you to remain persistent and unwavering in your resolve to systematically
identify those issues that threaten the very rights we have been
granted. But first, I believe it is important to know and understand these rights and to grasp what is at stake each time lawmakers or judges of the law convene to revise or interpret laws.
In this age of rampant litigation and legislation the rights of citizens are slowly disintegrating. And, with new laws being formed
through broad and sweeping interpretations from our judicial
systems, government has joined in the fight to exercise its right
over the very citizens who give it its power and authority.
For example, the recent U.S. Supreme Court case Kelo vs.
City of New London essentially paved the way for cities to
seize private property in the interest of private economic
development under eminent domain. The court ruled 5-4
that people’s homes and businesses—even those not considered blighted—can be taken against their will for private
development if the seizure serves a broadly defined “public
use.”
Unfortunately, this ruling provides ample precedent for any
municipal government to exercise their authority when
faced with the obstacle of public interference regarding projects deemed beneficial for the common good. As in the
Kelo case, the Supreme Court’s interpretation of the law
provides the necessary formula to invoke powers of eminent domain indiscriminately.

But, what about the Constitution?
The Constitution has served as the supreme law of the land due
to the fact that:

VOLUME 31-ISSUE 5

No other laws may contradict any of its principles; and,
•
No person nor the government is exempt from following it.
The Constitution has three main principles. They are:
•
inherent rights
•
government by the people; and,
•
separation of powers, which grants each branch of
government different powers and establishes a system of checks and balances amongst the three
branches.
The United States’ system of government has worked well
under these set of principles for more than 200 years. No
other form of government ensures as much for so many.
Carefully crafted and constructed, each citizen and noncitizen’s rights are granted, protected, and listed in the Constitution and its amendments.
Inherent rights were first written in the Declaration of Independence and explained as the basis for all other rights
granted in the Constitution. The belief that life, liberty, and
the pursuit of happiness are core, foundational elements
that should be made available to all people, was the impetus behind the principle of inherent rights. Among these are
the:
•
•
•
•
•

right to freedom of religion;
right to freedom of speech;
right to bear arms, or to own weapons;
right to a trial when accused of a crime, and to know of
what crime one is accused; and,
right to own property and to expect the government
to help protect private property.

As Real Estate professionals, we must strive to understand
and familiarize ourselves with the rights, protections, and
guarantees provided in the U.S. and State Constitutions and
laws of our state and local governments. We should do so
to ensure equal rights and protection for our clients, ourselves, and every Arizonan and American at every turn.
Our willingness to embrace the ideals of an ever-changing
society should never require us to compromise on issues
that challenge or call into question the inherent nature of our
Page 6

Eminent Domain…Inherent Rights …Constitution?
Continued from page 6
most basic and fundamental rights—and the expectation
for government to protect and not diminish them.
As REALTORS®, it is imperative that we uphold our
commitment “to protect the individual right of real estate
ownership and to widen the opportunity to enjoy it.” There
are a variety of ways to uphold your commitment—
however, the starting point is through your support and
involvement in your Association and your community. Our
voices must be raised to their highest levels regarding this
issue or stand the risk of being forever silenced in our
communities.
For more information on the issue of eminent domain, and
to learn more about available tools and resources, please
see the eminent domain section of www.realtor.org at
Http://www.realtor.org/realtororg.nsf/pages/
EminentDomain
Editor’s Note: Samuel Audrey is the SEVRAR
Director of Government Affairs. He may be
reached at (480) 505-6401 or
saubrey@sevrar.com

A NOTE ABOUT GUEST COLUMN
ARTICLES
Guest column articles do not reflect the policies or
interpretations of law by the Arizona Department of Real
Estate. They are meant to inform the public and provide
variety to ADRE’s Bulletin. All articles are edited for space
limitations.

.

VOLUME 31-ISSUE 5

Licensing and Professional Education Division Recap
(January - October 2005)
By Cindy Wilkinson
The year 2005 has been one of change for the Licensing
and Education Divisions. The most apparent change is
that the two divisions were merged and a new division
director was appointed. This summer we began weekly
training sessions for staff before the office opens, and we
are encouraging cross training in the various procedures
and processes the division handles. We are standardizing
and documenting procedures so that employees have
appropriate reference resources.
A record-breaking 35,559 Arizona real estate license
examinations were administered by Thomson-Prometric
(formerly Experior), the vendor contracted to administer
license examinations for the Department. The division had
a record number of original applications filed,
accompanied by a steady stream of renewals and an
overwhelming number of telephone calls.
Original
Applications Filed
Salespersons 11,382
Brokers
802
TOTAL
12,184

Renewal
Applications Filed
11,322
3,746
15,068

There are just over 76,000 current (active and inactive
status) licensees, and another approximate 11,000 in their
'grace' year, who have the right to renew without
reexamination. The 18-person division received 140,170
calls, the bulk of which were answered by two employees.
To date, the 5-member Education staff has reviewed
2,294 waiver requests, 930 course applications, 519
instructor applications, and 43 applications to open or
continue to operate real estate schools. Division staff also
verifies compliance with the continuing education
requirement for renewal of a real estate license--whether
filed on-line, in person or by mail.
Rapid acceptance of the On-line Renewal System (OLRS)
has helped us come close to maintaining previous service
levels despite record growth in the licensee population.

Page 7

Licensing and Professional Education Division Recap
(January - October 2005)
continued from page 7
service levels despite record growth in the licensee
population.
Use of the OLRS prompted clean up of the database of
approved schools, courses and instructors.
Because of the availability of the OLRS, we have
discontinued the courtesy mailing of 4-part renewal
applications to licensees approaching their license
expiration date and, instead, send a postcard encouraging
use of the OLRS. This saves time and money on an
ongoing basis by reducing paper usage, printing and
postage costs, and freeing up resources otherwise
needed to review, process, file and store renewal
applications that are filed by mail or in person. Licensees
save time and gasoline by renewing and making other
license changes on-line. Phase II of the On-Line system
will bring additional functionality and enhanced services.
The Department awarded the first Business Brokerage
Specialist (BBS) designation to David D. Long, a real
estate salesperson in Prescott, Arizona, and has awarded
a total of thirteen BBS designations since the rule was
adopted in March.
A nine-week delay in processing applications received
through the mail has been reduced to six weeks, and we
are proud of having resolved a 6-month backlog of
unprocessed fingerprints.
The division has updated school, course and instructor
approval application forms, and is working on updating
and revising the many Licensing forms. We have
developed a form to use to request a waiver of the license
requirements. The form identifies the waivers available
and supporting documentation required for each, making
the process easier for license candidates and for staff.
The Licensing and Professional Education Division is
committed to continual improvement in the quality of
service provided to its licensees, and will work to further
enhance its processes and procedures toward that end.
Editor’s Note: Cindy Wilkinson is the Director for the
Licensing and Professional Education Divisions.

VOLUME 31-ISSUE 5

Subdivisions Report
By
Roy Tanney
When asked to recap what happened in Subdivisions this
past year, I could not help recalling the tune “I Will
Survive” by Donna Summer. That title pretty much sums it
up. With little time left in 2005, it appears we will survive
the tremendous volume of land development and
homebuilding activity in Arizona.
Much to the chagrin of developers and homebuilders, the
processing time for Public Reports increased dramatically.
Processing times have been on a gradual decrease since
filling 3 vacancies over the past 6 months. The vacancies
filled were 2 examiner positions and 1 administrative
support position. We still have a long way to go, however,
in getting this division properly staffed to handle the
workload.
I spent a good amount of time in 2005 at the Department
of Water Resources (DWR) representing the ADRE on the
Governor’s Drought Task Force and Department of water
Resources Assured Water Supply Committee. Earlier this
year, the Drought Task Force came out with its plan for
dealing with Arizona’s drought conditions. The Assured
Water Supply Committee is reviewing the assured and
adequate water supply rules and will be proposing new
rules early next year. I believe the new rules, if adopted,
will be of great benefit to developers and homebuilders
when it comes to obtaining Certificates of Assured Water
Supply and Water Reports from DWR.
2005 has seen Cindy Ferrin (Deputy Director of
Subdivisions) and I heavily involved with Arizona Mexico
Commission (AMC) related issues. Cindy has been a
regular at most AMC meetings, including various
Plenarys, Real Estate Ad Hoc Committee and Cross
Border Transactions Committee. We have been
developing a Subdivision Public Report application that is
tailored for use on subdivision developments located in
Mexico. Earlier this year I traveled to Hermosillo, Sonora
to visit with Sonora officials and learn about their
regulatory process.
We have also been working on an update to our
Subdivision Public Report Application used by Arizona
subdividers. It has been a long and tedious process
working with stakeholders and trying to reach agreement
Page 8

Subdivisions Report
Continued from page 8
on language. By the time you are reading this article, I hope
the new application is final and available for use. Watch for it
on our website.
My saying “it has been a very busy year” is an
understatement. There have been no dull moments this year
in Subdivisions and I know this is also true for the other ADRE
divisions. I expect 2006 to be no different, but we will
survive.
Editor’s Note: Roy Tanney is the
Director for Subdivisions.

Investigations Division Yearly Review
By
Tom Adams
The Investigation Division of the Arizona Department of Real
Estate investigates complaints against licensed brokers and
salespeople, but it is involved in much more than just that.
The division also investigates allegations of unlicensed persons participating in real estate activity, unlawful subdivisions,
violations of statute or rule by lawful subdivisions, as well as
cemetery, timeshare, membership camping and educationrelated violations (unlicensed schools or instructors, unapproved courses, etc.).
Statistically the Department is seeing an increase in both the
number of complaints and severity of violations reported. In
Fiscal Year 2004 the Department opened an average of 74
new cases per month; in FY2005 that number increased to 92
per month. The first four months of this fiscal year (FY2006),
an average 132 new cases per month were reported. During
FY2004 the Department opened a total of 1,112 cases, with
1,095 cases opened in FY2005. From July through October
(the first 4 months of FY2006) the Department opened 528
new investigations – a rate that, if it continues, will equate to
1,584 investigations for the Fiscal Year.
During both FY2004 and FY2005 the Investigation Division
closed an average of 91 cases per month, while FY2006 has
shown an average of 137 cases closed per month.
Along with the increasing number of complaints investigated is
the increasing number of serious violations. During calendar
year 2003 the Investigation Division forwarded 67 cases to the
Administrative Actions Division for possible disciplinary action.
Calendar year 2004 saw 127 cases sent to Administrative Actions, while calendar year 2005 is on pace to refer over 200
cases for discipline.
Many investigations are much more complicated and involve
significantly more time than in the past. Subdivision investigations are expanding from small situations involving 10 to 12
parcels to cases involving large tracts of land, sometimes including over 200 parcels. Each subdivision case requires extensive document gathering to show ownership, changes of
ownership, relationships among the parties, and more.
The Department has a team of investigators dedicated to subdivision investigations and has been successful in issuing
Cease and Desist orders or in suspending Public Reports on

VOLUME 31-ISSUE 5

Page 9

Investigations Division Yearly Review
Continued page 9

several subdivision cases. Subdivision violations, either illegal
subdivisions or lawful subdivisions involved in illegal activity,
remain a priority of the Department.
Another area that has drawn significantly on Department resources is predatory agents. An article in last month’s Bulletin
by Investigator Henry Soza addressed this issue, however it is
a matter of great concern to Commissioner Richardson and
the Department. Predatory agents are involved in various
schemes to obtain money and/or homes from lower income,
less educated, or less sophisticated sellers and buyers. The
Department has been successful in not only issuing summary
suspensions for certain licensees involved in these practices
but, working with the State Attorney General’s Office, in prosecuting them for criminal fraud.
The Investigation Division has also increased its involvement
in the investigation of unlawful license activity (licensees who
continue to practice real estate after their license expires or
without being properly licensed to a broker), and failure of licensees to timely report required information (criminal convictions, civil judgments, etc.) to the Department as required by
rule. The Division is also much more involved in investigating,
and forwarding for discipline, cases involving allegations of
violations by schools or instructors (including unlicensed
schools or instructors and unapproved classes).
The Department’s goal is not to take disciplinary action against
licensees (or others), but rather to have them comply with the
statutes and rules governing real estate transactions in Arizona. Rest assured, however, that if and when violations are
discovered, the Department will pursue them and will take action to correct the situation.
Editor’s Note: Tom Adams is the Director for
the Investigation and Auditing Division for ADRE.

DID YOU KNOW?
By
Tom Adams, Director of Investigation

You could be conducting unlicensed activity. There are a
number of things that occur which result in unlicensed activity, but one of the most common is brokers becoming
confused about the distinction between their personal broker’s license and the business license, and believe they
both expire together. As a result, either the entity license
or the designated broker’s license is not renewed timely,
causing the entity and all its licensees to become inactive
and unable to legally perform real estate activity.
When the Department issues a license to an entity
(employing broker) that license, like all other licenses, is
governed by A.R.S. § 32-2129, which provides that it is
valid for two years from the date issued. Renewal licenses are valid for a period commencing on the date of
issuance, but no earlier than the first day after the expiration of the previous license. What this means is that the
entity license always runs for two-year periods from the
date first issued, no matter when it is renewed (early, late,
or on time).
Entity licenses and designated broker licenses run on
separate timeframes, however if either the entity or designated broker license is terminated, expired, suspended, or
otherwise inactivated, the entire entity and all its employed
licensees are inactive and cannot conduct real estate activity.
It is extremely important that designated brokers establish
a system to ensure that all licenses affiliated with their entity, including the entity’s and the designated broker’s licenses are renewed timely. Failure to do so results in a
delay of the renewal of the license while the Department
conducts an investigation, which may result in disciplinary
action.
The Department’s intent in increasing the emphasis on
unlicensed activity and in tightening the potential outcomes for such activity is to emphasize the importance of
maintaining a valid license and to express the seriousness
with which the Department views violations of the licensing statutes.
Editor’s Note: Tom Adams is the Director for
the Investigation and Auditing Division for ADRE.

VOLUME 31-ISSUE 5

Page 10

When is a Subdivision Report Required?
By
Roy Tanney

A frequently asked subdivision question is “Do I need a Subdivision Public Report? In order to arrive at an answer, you
must first understand the definition of Subdivider
( A.R.S. § 32-2101(54). A Subdivider is any person who offers for sale 6 or more lots in a subdivision or who causes land to
be subdivided into a subdivision. Subdivision is defined, in part, as land divided into 6 or more lots, A.R.S.§ 32-2101(55).
The majority of individuals can accept that section of the Subdivider definition where the act of dividing land into 6 or more lots
classifies them as a Subdivider but are astounded when informed of their Subdivider status when offering for sale 6 or more
lots in an existing subdivision. The astonishment is a result of several factors, which include:
1.
2.
3.
4.
5.
6.
7.

Someone else created the subdivision many years ago.
A Public Report has previously been issued.
Lots in the subdivision have been sold and resold for years.
The subdivision has completed infrastructure, i.e. roads and utilities.
Lot owners have received building permits.
Lots were acquired over a long period of time.
I never owned 6 lots at any one time.

None of the above factors matter. A.R.S. §32-2183(F) provides that a subdivider shall not offer for sale any lots in a subdivision without first obtaining a Public Report. A.R.S.§ 32-2183(A) requires a subdivider to furnish each buyer a
copy of the Public Report before the buyer sign an offer to purchase.
Relief from the burden of obtaining a Public Report may be found in various exemptions provided under A.R.S. § 32-2181.02.
If such an exemption is not found to be available, an owner may petition for a Special Order of Exemption under the provisions
of A.R.S. § 32-2181.01. The issuance of a Special Order of Exemption is discretionary and fees are non-refundable.
Editor’s Note: Roy Tanney is the Director
for Subdivisions.

VOLUME 31-ISSUE 5

Page 11

DISCIPLINARY ACTIONS
Schreck and Associates Realty/Andy Schreck (Glendale)
File # 06F-DI-169-REL, Consent Order 10/21/05
On 6/12/03, the Department issued a real estate broker’s license to Schreck and Associates Realty, which license expired on 6/30/05. On 6/15/05, the Department issued a broker’s license to Schreck, which expires 6/30/07 and he was at
all times material to this matter, the designated broker for
Schreck and Associates Realty. From 7/1/05 through 9/29/05,
Schreck and Schreck and Associates Realty continued to employ real estate licensees and conduct activity that required a
real estate license even though Schreck and Associates Realty broker’s license had expired, in violation of A.R.S § 322122 (B) and 32-2153 (A)(10). Schreck and Associates Realty’s renewal application for brokers license is granted.
Schreck and Schreck and Associates Realty’s licenses are
subject to a thirty (30) day suspension retroactive to 9/29/05.
Schreck and Associates Realty and Schreck are jointly and
severally assessed a civil penalty of four thousand dollars
($4,000.00).
Pioneer Properties INV/Ellen Clark (Tucson)
File # 06F-DI-185-REL, Consent Order 11/3/05
On 6/7/89, the Department issued a real estate broker’s license to Pioneer Properties INV, which license expired on
6/30/05. On 3/15/89, the Department issued a broker’s license to Clark, which expires 4/30/07 and she was at all times
material to this matter, the designated broker for Pioneer Properties INV. From 7/1/05 through 9/29/05, Clark and Pioneer
Properties INV continued to employ real estate licensees and
conduct activity that required a real estate license even though
Pioneer Properties INV brokers license had expired, in violation of A.R.S § 32-2122 (B) and 32-2153 (A)(10). Pioneer
Properties INV’s renewal application for brokers license is
granted. Clark and Pioneer Properties INV’s licenses are subject to a thirty (30) days suspension retroactive to 9/30/05.
Pioneer Properties INV and Clark are jointly and severally assessed a civil penalty of two thousand dollars ($2,000.00).

V O L U ME 3 1 -I SS U E 5

Branding Iron Realty, LLC/Ronald Johnson (Carefree)
File # 06F-DI-184-REL, Consent Order 11/4/05
On 5/5/03, the Department issued a real estate broker’s license to Branding Iron Realty, which license expired on
5/31/05. On 11/9/89, the Department issued a broker’s license to Johnson, which expires 8/31/06 and he was at all
times material to this matter, the designated broker for
Branding Iron Realty. From 6/1/05 through 9/8/05, Johnson
and Branding Iron Realty continued to employ real estate
licensees and conduct activity that required a real estate
license even though Branding Iron Realty brokers license
had expired, in violation of A.R.S § 32-2122 (B) and 322153 (A)(10). Branding Iron Realty’s renewal application for
brokers license is granted. Johnson and Branding Iron Realty’s licenses are subject to a forty five (45) days suspension retroactive to 9/8/05. Branding Iron Realty and Johnson are jointly and severally assessed a civil penalty of two
thousand dollars ($2000.00).
Eric Gonzalez (Phoenix)
File # 06F-DI-200-REL, Consent Order 11/14/05
Jerry Tuzil, the designated broker for Gonzalez, and Home
One Real Estate Services, allowed Gonzalez to continue to
be employed and to operate as a salesperson, after he
failed to timely renew his license by 8/31/ 2005, in violation
of A.R.S § 32-2122 (B), 32-2153 (A)(10)(22), (B)(6). Gonzalez’s real estate salesperson’s license is suspended for
fifteen (15) days retroactive to 10/12/05, the date Gonzalez
ceased conducting unlicensed activity and he is assessed a
civil penalty of five hundred dollars ($500.00). Gonzalez is
eligible for reinstatement of his license after he has satisfied
all terms of the consent order.
Michael D. Haller (Gilbert)
File # 06F-LI-071-REL, Consent Order 10/21/05
Jason Cleland, the designated broker for Haller, and CPA
Advantage Realty, allowed Haller to continue to be employed and to operate as a salesperson, after he failed to
timely renew his license by 5/31/ 2005, in violation of A.R.S
§ 32-2122 (B), 32-2153 (A)(10)(22), (B)(6). Haller’s real estate salesperson’s license is suspended for thirty (30) days
retroactive to 5/31/05, and he is assessed a civil penalty of
one thousand dollars ($1,000.00). Haller’s application for
renewal of his license is granted, after he has satisfied all
terms of the consent order.
Page 12

Disciplinary Action
Continued page 12

Guy Sularz (Scottsdale)
File # 06F-LI-138-REL, Consent Order 11/14/05
Cathy Kelley, the designated broker for Sularz, and HFM
Realty, allowed Sularz to continue to be employed and to
operate as a salesperson, after he failed to timely renew his
license by 2/28/2005, in violation of A.R.S § 32-2122 (B),
32-2153 (A)(10)(22), (B)(6). Sularz’s real estate salesperson’s license is suspended for sixty (60) days retroactive to
9/12/05, and he is assessed a civil penalty of five dollars
($500.00). Sularz’s application for renewal of his license is
granted, after he has satisfied all terms of the consent order.

CONSENT ORDERS
(APPEALABLE AGENCY ACTION)
Anthony Mason (Phoenix)
File # 06F-LI-083-REL, Consent Order 10/26/05
On 8/24/05, Mason applied for reinstatement of his real estate
broker’s license. Mason admitted on his application for
reinstatement of his broker’s license that the Department had
canceled his license for Abandonment of his real estate office,
when he failed to notify the Department of his change of
business address. Mason’s actions were in violation of A.R.S §§
32-2126 and 32-2153 (A)(3). Mason is issued a broker’s license
and assessed a civil penalty of two thousand dollars ($2,000.00).
Judy K. Kantautas (Chino Valley)
File # 06F-LI-073-REL, Consent Order 10/20/05
On 5/26/05, Kantautas applied for renewal of her salesperson’s
license. Kantautas admitted on her application that she had
been convicted of a misdemeanor DUI, in 3/2004. Kantautas
failed to notify the Department within 10 days of that conviction,
in violation of A.R.S § 32-2153 (A)(3) and A.A.C. R4-28-301(F).
Kantautas is assessed a civil penalty of one thousand dollars
($1,000.00).
Neal A. Thompson (Phoenix)
File # 05F-LI-386-REL, Consent Order 10/21/05
On 4/25/05, Thompson applied for renewal of his salesperson’s
license. Thompson admitted on his application that he had been
convicted of a misdemeanor DUI, in 1/2005. Thompson failed to
notify the Department within 10 days of that conviction, in
violation of A.R.S § 32-2153 (A)(3) and A.A.C. R4-28-301(F).
Thompson is issued a 2-year provisional license, subject to
specified terms and conditions. Thompson is assessed a civil
penalty of one thousand dollars ($1,000.00).
Carol Hodesh (Avondale)
File # 05F-LI-395-REL, Consent Order 11/1/05
On 9/30/05, Hodesh timely applied for renewal of her real estate
broker’s license. Hodesh has been the designated broker for
Embassy Properties for the past 10 years. Hodesh admitted on
her application that there had been city and health code
violations at the Embassy Properties, for which the City of
Phoenix Housing Preservation had fined Embassy Properties.
Hodesh failed to notify the Department within 10 days of those
violations, in violation of A.R.S § 32-2153 (A)(3), and
demonstrated incompetence and negligence in violation of A.R.S
§ 32-2153 (A) (19)(22) and B(8). Hodesh is renewal of her
broker’s license is granted and is assessed a civil penalty of one

V O L U ME 3 1 -I SS U E 5

Page 13

CONSENT ORDERS
(APPEALABLE AGENCY ACTION)
thousand dollars ($1,000.00), resulting from a settlement agreement.
Embassy Properties (Phoenix)
File # 05F-LI-395-REL, Consent Order 11/1/05
On 3/17/97, Embassy Properties was granted an original brokerage license, which was to expire on 3/31/05. Carol
Hodesh has been the designated broker for Embassy Properties for the past 10 years. On 3/31/05, Hodesh timely applied for renewal of Embassy Properties real estate broker’s license. Hodesh disclosed on the application that there
had been violations at the Embassy Properties by the Neighborhood Zoning Preservation. Hodesh did not disclose
that the City of Phoenix also found violations and had fined Embassy Properties. Hodesh failed to notify the Department within 10 days of those violations, in violation of A.R.S § 32-2153 (A)(3)(19)(22) and B(8). Embassy Properties
application for renewal of it’s broker’s license is granted and Embassy Properties is assessed a civil penalty of one
thousand dollars ($1,000.00).

V O L U ME 3 1 -I SS U E 5

Page 14

ARIZONA DEPARTMENT OF
REAL ESTATE
Main Office:
2910 North 44th Street, Suite 100
Phoenix, Arizona 85018
Phone: 602.468.1414
Fax: 602.468.0562
Southern Arizona Office:
400 W. Congress, Suite 523
Tucson, Arizona 85701
Phone 520.628.6940
Fax 520.628.6941

We are on the web:
http: //www.re.state.az.us

The Bulletin
An official publication of the State of Arizona,
Department of Real Estate.
Janet Napolitano
Governor
Elaine Richardson
Commissioner
Ronald Passarelli
Deputy Commissioner
Mary C. Utley
Editor
Real Estate Advisory Board
Gary Brasher, Chair
Lisa A. Suarez, Vice-Chair
R.L. Brown, Past Chair
Vicki L. Cox-Golder
Frank Dickens
Colleen Newman
Vince Pellerito
Felipe Andres Zubia
Ann White

Note: Please check your mailing label and if the date
above your name is more than 1 year old, you must subscribe for another year. Send your request along with a
check payable to ADRE and note on your envelope:
Attention: Bulletin Subscription.
© 2005 ARIZONA DEPARTMENT OF REAL ESTATE. THE ARIZONA REAL ESTATE BULLETIN, OR “THE
BULLETIN,” IS SCHEDULED TO BE PUBLISHED 6 TIMES A YEAR AND IS AVAILABLE FROM THE WEB SITE
ABOVE. FIRST-CLASS MAIL SUBSCRIPTIONS ARE AVAILABLE FOR $10 PER YEAR. ARTICLES
REPRINTED FROM OTHER PUBLICATIONS DO NOT NECESSARILY REFLECT THE POLICIES OR
INTERPRETATIONS OF LAW BY THE ARIZONA DEPARTMENT OF REAL ESTATE. THE ARIZONA
DEPARTMENT OF REAL ESTATE IS AN EQUAL EMPLOYMENT OPPORTUNITY, REASONABLE
ACCOMMODATION AGENCY.

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