Arizona Department of Real Estate Rule Changes with Commissioner Susan Nicolson

Join ADRE Commissioner Susan Nicolson and Deputy Commissioner Mandy Neat for an in‑depth walkthrough of the new real estate rules and legislative changes impacting Arizona licensees, including the major rule package that took effect December 13 and 2024 statutory updates.

This session is especially relevant for brokers, managing brokers, salespersons, property managers, and educators across Arizona.

Transcript

Susan Nicolson: 0:04

All right. Good morning, Northern Arizona. Thank you so much for joining me today for a update on the new rules that took effect December 13th. This was two years in coming, so it takes a long time to do a five year rule review. The Department of Real Estate haven't successfully completed a rule review in over 20 years, I think, is how it landed. By the time we were finished, and so we had to redo, we had to do a rule review on everything, not just the evens or the odds, which is what the department will be able to do every five years now going forward. So it was a huge undertaking, and we're really grateful to all the licensees that participated in that rulemaking process, because we came out to licensees at least five different times that I can think of off the top of my head and ask for feedback and input and assistance with it. So thank you. If you guys read rules, and we're like, let me, you know, help you get this right. So all right, let's just dive right into the rules as we change them, and things that as licensees you should probably be aware of in case you ever need these things. So some of the things that we changed were just in the definitions in and of themselves, both our statutes and our rules Administrative Code have a section of definitions. We clarified how we count timeframes now and defined that so the day of the Act does not count as we count processing an application, processing a course, but the last day is included in our count. So just like your purchase contracts, the negative contracts have a stipulation in there and how you count your days. We we didn't want that to be a moving target for you from one administration to the next, so we went ahead and defined that enroll administrative completeness review and substantive review. So these are two things that are written into law. Administrative completeness is basically you completed all the boxes on the application, and the application is complete, and we can, we can process it. There's a time frame that's spelled out in law for all of our different types of things that we do here at the department, for when we have to complete an administrative completeness and a substantive review. Completeness. Substantive review is really more for broker, license applications, disciplinary action, disclosures and reviews of those, and courses, if you guys are writing courses, those are, I think, the three that we spend the most time actually substantively looking at what is inside this. And is this something that we're going to give our seal of approval to, or are we going to deny it or ask for more? So those things were more clearly and better defined, so that that's not going to be a moving target, moving forward licensing disclosures, the original licensure or renewal questionnaire, copies of certified records. We I can't tell you how many times the law required certified records. Well, if you did something 38 years ago in a small little town somewhere like good luck getting a certified record out of that court or out of that recorder's office or, you know, wherever it might have been kept, because all government agencies kind of have retention record laws. For how long we maintain public records and those may have been destroyed. And then for those candidates who had records that were destroyed, we had this law in place that said, Well, this is what you have to provide. And it created a hot mess. So we can accept copies of your certified records, because you probably retained a copy yourself, and you don't have to go back to the original issuing authority and get that fresh certification references in a 10 year work history are no longer required comprehensively, the department has redone every single form that you use and interacting with us for anything. We have streamlined every single one of them. There's actually a data sheet on how many fields were deleted overall and per form. And one of the big things that I did was sort of say, how are we utilizing this information? Are we even utilizing this information? And do I have the statutory authority to actually do that? And so in the case of 10 year work histories, these are no longer required because we weren't doing anything with it. So why am I making a candidate? Or licensee give that to us if we're not doing anything with it. Support for your application, if applicable, must include evidence of restitution or otherwise remedying of the matters disclosed. So this has been something that I pretty much held the line on. You know, people are complicated, and sometimes you don't make the choices. Sometimes you don't even know that the choice that you're making wasn't the good choice, right? There's a lot of I didn't, didn't know hindsight 2020, but when you have caused harm to another and court has ordered you to make restitution, I'm going to want to see before I give the public trustee with a real estate license, that you are at least in good standing on that restitution, that you're making a good faith effort to do what society, what the justice system, what due process has said you owe to the country. So, so that's the thing, and it has to now be included fingerprint clearance cards. This is like the beat the dead horse. I feel like I've done this presentation so many times now, but there was some pushback. And so, you know, it came across loud and clear that licensees are confused. Do I need to do this? Don't I need to do this? The answer is yes, you have to go get your fingerprint clearance card. So there was an organization that decided to say, I don't have the statutory authority to require fingerprint clearance cards. So the next few slides are actually going to address the statutory authority for the requirement. But I also believe in transparency, being just out and honest with why I'm making certain decisions to exercise certain points of statute. So here's what the statute that there isn't a revised statute. 32 2108 c2 it's under my duties of the commissioner to make investigations and to require information. And what c2 says is that the commissioner may require any reasonably necessary additional information about an applicant or holder of a license. So I think everyone on this call, unless you're an affiliate, but you know, if you're practicing real estate, you are all holders of a real estate license, right? So you all hold a real estate license, so that's where the statute comes into play. And then it says that the information that I may require could be a valid fingerprint clearance card issued pursuant to Arizona revised statute, 4117 58.03 so it's important to then kind of talk about that statute, because that is what a fingerprint clearance card is. So please don't come to the department with a cardboard piece of paper with your inky fingerprints on there. That's not a valid fingerprint clearance card. What is a valid fingerprint clearance card is what is issued pursuant to this statute. And when we go back to that first statute. It said reasonably necessary. So what triggered inside me to say it is now reasonably necessary that I make the requirement that if you hold a real estate license, you have to go get a fingerprint clearance card. So this is part one of what happened in the 2024 legislative session. House Bill 2243 passed and was signed into law by Governor Hobbs on May 17 of 2024 and that following September, I started receiving rack back service reports on licensees. So prior to 2024 when this law passed, I did not receive updates on the criminal activities of license holders. I only could receive updates on criminal activity from my employees here at the Department of Real Estate. So what the law change did is it said that wrap back reports, which is the FBI reporting system nationwide, of criminal activity can be reported to licensing agencies and on their licensees. And so I started receiving reports in late 2024 is when they started coming through, and this is what started being reported to me. This isn't all of them. We continue to get these in. I mean, I'm not going to say this happens every day, but every couple of months, we see something happen. So initially, we only had 1700 licensees that actually had a valid fingerprint clearance card that was signed up into that federal system. Those cards expire every six years. My understanding from the director over at the Department of Public Safety, Colonel Glover, is that that's tied to a federal law. He didn't choose six years out of his hat that's tied to the federal system. And there are people you know, a real estate licensee has tremendous public trust. People give you the keys to their house. House, they give you full access to their house, and you know where they live, and I had to do a suspension due to the arrest of felony Sexual Child Abuse. That was March of 25 in September, prior to us starting to receive it, the clerk of the court felt it was so important to let us know that they reported to us because the license you did not self report a felony conviction for attempted child sex trafficking. We did a suspension on 10 counts of felony sexual exploitation. We did a suspension on an arrest due to unlockable viewing and taping and then felony distribution of those images, like, again, access to people's houses unsupervised by homeowner, like just the amount of access that real estate licensees are trusted with another one you guys can read the screen, right? I mean, the list is disgusting, and we have to protect you, because it's a very bad day if you walk into a vacant house that's being used by a human trafficker as a drop house, right? That's not a good day. We have to protect your clients, your customers, because we don't want somebody utilizing their lockbox key to do awful things, because that's they're an awful person. And the only way for me to put the best protections in place is to say it's required. So when I go back to the original here's your duties, and here's the power that these statutes are going to allow you to have when you're Commissioner. The reason that this is reasonably necessary to me is that what a fingerprint clearance card is and does changed in 2024 and the result of that change being reported to the department made me realize that our licensees and the public may not be safe, and therefore I made the requirement where it said that I may require a valid fingerprint clearance card. I am requiring a valid fingerprint clearance card. When is the requirement? It's now. It's right now. I want you now to go out and get a valid fingerprint clearance card if you don't have one. When will we actually start taking suspending licenses that don't have it right? When are suspensions going to start? As soon as I have staffing or it that can handle that without throwing a massive disruption into the real estate industry itself. So we're constantly tracking we have 27% now of licensees who have a valid fingerprint clearance card. When we get to a point where our licensing staff can actually handle it, if we send out a 90 day 60 day 30 day notice to people, then we're going to start sending out those notices. But right now, we can't handle the volume with staffing and our it isn't sophisticated enough to do the validations that are necessary. We are in the process of that. It modernization now, and the vendor knows that if there is any way possible to roll out this segment of our licensing system early, that I would very much like to so it's a moving target. The latest would be January of 2027 because the new computer system will be up and running by then and and we'll send out the demand. What I can't stress enough is they have to do a whole background check on you at the Department of Public Safety before they can issue you this fingerprint clearance card. Right now, we have about 60,000 licensees outstanding that don't have their cards in. If you wait until 60,000 people get a 90 day 60 day, 30 day notice to go get the card, it's gonna there's going to be a backlog, and then your time is going to expire, and then your license may be suspended. So please, please do not wait, and please be part of the solution. You know, be part of the good to say there's a valid reason for us to protect our industry and our communities, and take my name off of the list of people you got to worry about. That would be fantastic. I would be super thrilled if you guys would help out that way. So going into statutory authority a little bit more, and this is where it's kind of beating the dead horse. So I'll go through it a little bit faster. But these are the licensing laws, A.R.S 3221 23 and A.R.S 3221 30. So that's where A.R.S 2123 is for original license. Your A.R.S 2130 is for renewals. Both of those sections. In A.R.S 2123 it says that I can require for an original license a valid fingerprint clearance card. And then over in A.R.S 2130 it says, if you're renewing your license, I can require anything that was required when you were originally licensed. In A.R.S 2123 so that's going to include a valid fingerprint clearance card. Then there's another wall out there. A.R.S 32 2108 talks about what is a licensed applicant, and that the what the licensed applicant is responsible to provide. And so here's where we get into that definition. This is what a licensed applicant is. And number two says a licensed applicant is each natural person. Comma, I think you guys are all natural people. I don't. Think we have any bots on here, right? There's no AI bots that have real estate licenses yet, so you all kind of qualify as a natural person. And then there's a comma and the word or so. Then the next section is about entity applications. Those are common and or, and the next part is for renewal certificate, any natural person. And then there's an or person exercise and control, who's not previously submitted a fingerprint clearance card to the department. So clearance is what was added in the 2024 Legislative Session, because we knew Federal Law had changed, State had to come into compliance with it. And so we knew that we are our book and title and chapter also needed to be in compliance with it. So our 2024 Omnibus Bill aligned us so that we would be able to not have any confusion in requiring that you're going to need to have the fingerprint clearance card that's referenced in title A.R.S 4117 58.03 so there's that, and then there's one more over there that talks again about any natural person, comma or or an entity application who appears to that, blah, blah, blah. So I feel very, very strongly that I'm on the right side of statutory authority. I'm on the right side of policy, I'm on the right side of the intent of the legislature, and I'm on the right side of advocating and doing good for this industry. And then, of course, we go back to our rules update. We wanted it to be super crystal clear for the people that were saying, Oh, we're not really sure this fits within the licensed applicant and the renewal thing and that you can do it. So we clarified statute in rule, and we said an applicant for any department issued license needs to provide a valid fingerprint clearance card. So that is all tied together. Now, I believe in a nice, clean bow, but I guess we wouldn't know unless somebody decides to sue me, if we can take it to court, kind of a thing. And I'm, you know, I'm hopeful that I don't have to have that battle. And at the same time, I'm prepared to absolutely battle this because it'sthat important.

Mandy Neat: 17:04

Hey, Commissioner, I joined you.

Susan Nicolson: 17:07

Hey, we have Deputy Commissioner Mandy Neat on here too. So Mandy, you know, jump right in if you want to. Can you see the slides?

Mandy Neat: 17:14

Oh, I can see the slides. They look gorgeous. I mean, these colors that the State gave us are so pretty. So we have updated some rule sets that seem to have caused some confusions on why, and one of the big ones is doing business as. It used to be that you could only have as an entity, one doing business as name, and that's all our computer system allows for. But then, as times changed and things grow and things merge, and we come into situations in the enforcement arena, we realize our our laws over burdening business. And by that, I mean, let's think about timeshares. I know most of the people on this call, they're like, why are we thinking about time shares? Well, it's because it's under the umbrella of real estate. Or let's think about development services and builders. Well, it's under the umbrella of real estate, and a lot of them are merging, and they have multiple doing business as names. So my favorite place to go visit is the Marriott on vacation. I am so bad now I used to be okay with like, a little motel room as a kid, and I'm like, I need a washer, a dryer and a kitchen. And while Marriott's taken over the world, and they have tons and tons of different names that are with Marriott. Now Hilton's not one of them yet, but there are many other names that are with Marriott. Well, is it okay to restrict them to just the use of one DBA, or should they be able to advertise properly, and the consumers to be able to look them up. So we've actually been able to help update the rule set to say now you can have multiple DBAs as an entity, and our computer system that we're working on, that you just heard Commissioner Nicholson Speak on, will allow for this by the end of 2026 Yeah.

Susan Nicolson: 19:01

Okay. So then we have individual, individual licenses, because what our statute used to say, or what our rule used to say, is that you were not allowed to advertise on any name that is not on your license. You can't practice any real estate services, anything that requires a real estate license under any name that is not on your license. Well, you know, I had a choice to make. I could either say every single licensee out there who is on a team is in violation of this law, which I did not want to do, because that would be an awful hot mess. Or I could say, let's work on changing that rule so that an individual licensee can add whatever team they are working with to their license as doing business as so here's the things you need to know your designated broker, your. Brokerage, your entity, your employing broker, has to be prominently displayed in all of your advertising, but if you are also including a team name with your designated brokers name, entity's name, then that would need to be listed on your individual license as a DBA. All right, so here's the caveat on that we cannot accept DBAs for individual licenses until we get the new licensing software launched, and so there will be no enforcement on team names as DBAs on individual licenses until we launch the new licensing system. And everybody will get a notice, you know, just to give you guys a sneak peek, we are very excited about the new licensing system. You guys will have access to a wallet where you will be able the state of Arizona is creating a wallet and a mobile ID, and you would be able to put your driver's license, your vehicle registration, your vehicle insurance, your real estate license, into your state mobile wallet, and then when your license is going to expire, you would get a notification from your state wallet that would say your license is going to expire. And you open your wallet and you click there, and it's going to take you right to the renewal portal on the mobile optimized website for you, and it's already going to validate who you are. So if you are a person who has an Android or an apple, and you would want to download the wallet and put your digital real estate license in there, your face recognition or your thumb recognition is going to validate you, and you won't have to remember usernames and passwords, and that will be across all things for the state. So that would be your motor vehicle. That would be if you have anything with health and human services or department of economic security, or it's all just your face or your thumbprint. And I'm really excited that we're going to be able to offer that. We're excited about the tools that we're going to be able to bring with this modernization. Okay, showing services.

Mandy Neat: 22:07

Stay off the Real Estate Forum on Facebook. I don't know what you guys are doing out there. I know it's nobody on this call, of course, but so often we see little snippets that are sent in to us and it says, Hey, I decided to have a life and not show my clients homes, and so I'm out and about, and my buyer has to see these properties today. Will anybody in real estate Please show this property and I'll pay you $50 a door.

Susan Nicolson: 22:35

Okay? This is a real thing in the state of Arizona. As it turns out, I think all of you know, if you've been to any agency class or even end up gaining your real estate license, implied agency is a real thing. And what was happening is we were having too many people in these services basically saying no, no, no. I was just paid 50 bucks to open the door. I didn't say anything. I have no responsibility, no implied agency in this transaction. So this rule is to make it really crystal clear, you're not allowed to go and do licensed activity just for a fee. If you are out there opening doors for people, you and your brokerage have implied agency, and you are fully responsible for that portion of the real estate transaction. And if a consumer is harmed during that portion of the real estate transaction, then you will be held accountable for that. So that's kind of that one in a nutshell. All right. License renewals, we removed the requirement for the designated broker or the branch manager to do a paper format signing. We added in administratively complete we changed the words certification questionnaire to what the form is actually called, disciplinary actions disclosure form. And we added that sufficient details need to be included. When you have a disciplinary actions disclosure form, you don't get to leave blank the explanation that makes it really hard for me to make a determination. And we also added address of record an email address throughout because, as you know, if you're a small, little, self employed broker, you always had to have this choice of having your business address, maybe be your home address, and you didn't really feel safe doing that. And so a lot of small businesses would actually go and rent an office somewhere for 600 800 $1,200 a month that they hardly ever used to use their home office, but they just didn't want their home address to be listed on the department's website as where that entity is. You no longer have to worry about that. You can have an address of record and a Statutory Agent, as long as we know where and how to reach you, then you're going to be just fine. So we make those changes throughout the Administrative Code. You like this one Mandy, you do it.

Mandy Neat: 24:52

She's like passing this one on. Okay. First of all, how many of you are managing brokers? I was a managing broker. Broker. And I love saying as a joke, of course, to my designated broker. Well, no matter what I say, it just rolls to you. And now what the law, very clearly says is, if you have that delegated authority, then you are also held to the liability that the designated broker is held to, on that advice, on those advertisements, whatever you're part of with that delegated authority, you're liable as well. I mean, but the reality is, guys, managing brokers, have always been liable, because I don't know if y'all realize but everybody within the same brokerage has agency obligations to those clients. They have to do share obligations to the client. They have to deal fairly with the customer, but we're managing brokers. Were was an 1101 with the licensee, instead of 1103 with the broker saying, hey, hold up, wait a minute. You have to give good advice. You can't just wing it either. So if you're out there, you have delegated authority. This isn't a shift, because we could have still held you liable, but we're just making it very, very crystal clear that you stand with your broker.

Susan Nicolson: 26:06

We had too many managing brokers who didn't seem to understand that they were liable. So to help all of you out and make sure that you know you're liable, you always have been liable, we spelled it out. It's crystal clear now you're liable for the supervision, the advice that you give and how you direct a transaction to be conducted. All right, inactive licenses. Oh, yay. Okay, well, back in that 2024, legislative session, we were busy, and one of the changes that happened in our omnibus bill was that Senate President Peterson added a new licensing category called inactive. It always makes it a lot of fun, because we already had an inactive and so we had to do a lot of coding and rewriting and redefining of things when this law passed. But basically, life happens. Sometimes we have licensees who have something very tragic happen, and sometimes it's very joyful things that happen, but something has happened in life, and they need to put their real estate license on ice for a while. And so what you can do is you can join the inactive status. You still have to do your renewals, your disciplinary action disclosures. You have to keep updated with the Department of Real Estate every two years. So you're still going to get that like, Hey, your your license is going to expire. You're going to get those 9060, 30 day notices still, because you still have a responsibility to renew. But what you don't have to do is take 24 hours of continuing education every two years in order to renew your license if you're going to keep it in an inactive status, and you can do that for up to 15 years. The caveat is, when you do decide to come back into practice a you don't have to take 90 hours of pre licensing, but you do have to do a whole bunch of continuing education in some specified categories. So that is what we just laid out in rule is how much you have to do depending on how long you have been inactive, education. Oh, Manny or your wheelhouse.

Mandy Neat: 28:13

Oh, I'm so excited. If you didn't know, we launched a brand new exam for sales person licenses on January 2 of 2026 there's a state specific side, and there is a general side, and they must pass with at least 75% and while you're thinking about all that CE and you're thinking about, man, what else could I be learning, I really advise you to go to a zre.gov under the education division. You'll see education forms in resources and look up our new curriculum outline, because it's 46 pages of what you should know as a salesperson. But moving on, right, moving on. The other cool thing we did, because so many of you are awesome, and do your renewal hours as soon as you renew your license. So we see people renewing their license 90 days ahead of their expired license date, and now within that 90 days after you renew your license, but before your new period begins, all of those credit hours will count towards your next CE cycle. We also changed some of your course categories to broaden what they can instruct on. So Commissioner standards, even though her standards are extremely high, if you haven't noticed, and we could do a whole category on Susan standards, but they're not Susan's Commissioner rules, as we lovingly know them, as are the Arizona Administrative Code. So in that area, that brings in a lot of case law and other things. So we've changed the name to requirements for licensees. You need to know this information to continue to be compliant with your license and represent people properly. We've brought in fair housing to include Americans with Disabilities Act so commercial agents out there listening, I hope there. Some on this call, you should want to take the class. And if you're saying there's no courses for that, you know, I am more than willing to help you figure out how to write one and become an instructor. And then it turns out business brokers are real. So if you're listening and you're a business broker, you know, give me a call, because I really couldn't find any while I was in the practice and we were about to strike it from the law book. And then we met a whole Association of Business Brokers, and they're lovely. So if you take some business brokerage classes that will count towards legal issues, contract law disclosures or general real estate.

Susan Nicolson: 30:33

And then the last thing on the slide is, we don't care how many continuing education hours you take in a given day, but a day only has 24 hours, so you can't take more than 24 hours. 24 hours. If we see that you did 36 hours in a 24 hour period, you're going to have a problem with us, because we don't allow you to double dip. You can't take two courses at one time. You need to be focused and learning in the one course at one time. It used to be a legal restriction. The law was there that you could only do nine hours a day. Honestly, we struck it because we couldn't find any statutory authority to make that law and put that restriction on you. So if you're just gonna have some lattes and Red Bull it up and plow right through that sucker, you just knock yourself out. We we will accept your CE credits distance learning. Oh, you know, so Mandy and I used to both be licensees. We were both actively practicing before we decided to serve and work at the Department of Real Estate. And we got a text message, and I think probably some of you, since there's 150 of you on this call, so you might have gotten it too, and it went something along the lines of, you're so busy and doing those continuing education courses, it just really, really sought. So you pay me and I'll do them for you. And so Mandy and I were both like, yes, we're interested. Tell us more. How does this work? Well, you know, turns out it was a guy out of the country who was offering to sign in, you would go and buy your courses from a distance learning school, and then he would sign in, and he would take your courses, and then at the end, you would get emailed your certificates, and then he just hoped that you would pay him. We didn't pay him. He took courses, and we didn't pay him. But anyway, we were able to obtain his IP address, and then we were able to search our distance learning schools. We have them all do a little search for that IP address, and we found out that our distance learning schools actually weren't meeting the bar of certifying that the person taking the course is actually the real estate licensee. So we put into law that you have to have like, two factor authentication, or you have to have random audits of your students, or you have to have direct or indirect visual confirmation of the student is actually the licensee that you are going to certify and give a certificate to to say that they've met their CE requirements. We also put into law things that are no longer acceptable because username and password. I mean, come on, if you're if you're going to cheat us, you're going to just give your username and password for school to whoever is going to do it for you signed acknowledgement and affidavit. I mean, you're a cheater, so you're probably a liar. So you know no and verification of publicly available information. We're not that stupid, no. So anyway, that is now in law. We worked individually with every single one of our distance learning schools, I think we only have one or two left that are pushing back on this. They're sort of like, well, we don't do it. What are you going to do? And I said, you know, I more than invite you to no longer teach in Arizona, and that's what's going to happen. If you can't tell me with some degree of certainty that people you're issuing certificates to are actually the licensees you're giving you know that I'm giving credit to then you don't get to be a school in the state. So there's that. Is it my day? Fun? I know I get to do such happy things all the time. Advertising. Oh, Mandy, this is all you, and your your division, because you guys, she runs investigation.

Mandy Neat: 33:58

Well, yeah, I have a little bit of the entire department, and this is something that's always been so misunderstood. Well, first of all, schools, if you're listening, you no longer have to put your school address on all the advertisements, because people show up at the wrong place for the classes, but you do need some contact information on your advertisements. But guys, think about brand new agents. Why does a brand new agent typically join a brokerage? Well, you could go over training and coaching and all of that, but one of the other reasons is the production of that brokerage. And when we used to do postcards for our main source of advertising, and that wasn't that long ago, that was still the 21st Century, okay, what you would do is you would list all of your brokerages, houses that they sold in that area on this postcard, but it would just say Mandy, and it would say my brokerage, and I have my faith, and people like my mother would receive a copy of this postcard, and she'd go, Oh my gosh, look how many houses Mandy close. And you know how many houses I closed? None of them. So. My brokerage did all the work. We need all of those kinds of advertisements to be clear, if it's your transactional history or if it's relying on somebody else's so have disclaimers. Have information when you have multiple properties on a single advertisement, is that your listing, is that your sold buyer, or are you just saying the area? And you need to be specific, if that is your transactional history or not. Now I will tell you that I know we're speaking to Northern Arizona today. Your IDX feeds are in compliance. If you're using IDX or the MLS systems, you're already hitting these marks and guys the blue area here for any DBS on the call today, or or brokers with delegated authority. Don't freak out where it says the desire broker is responsible for all the advertising of real estate activity, because, truth be told, you always have been it was just buried under our A.R.S 428, 1103, section. Hang on a, 5b and it made you responsible for all agents advertising. All we're doing is being a crystal clear in 502. Hey, agents, be nice to your brokers. Turn in your doc, turn in your advertising, verify that it's going to be accurate. Follow their policies, follow their procedures, because they're standing with you if you mislead the public.

Susan Nicolson: 36:27

Yeah, and you know there used to be exceptions in the law that said it was only applicable if you were advertising a particular piece of property, and those were struck. So it is applicable to any advertising of any licensed real estateactivity

Mandy Neat: 36:44

And Commissioner, what I think you're going off is prominently displayed, right?

Susan Nicolson: 36:48

I mean, I'm thinking of like Property Management Services, right? I'm advertising that I'm a professional property manager that used to be excluded from a lot of our regulatory authority for advertising, and that that is no longer the case, but we can talk about prominently displayed, because people struggle with that.

Mandy Neat: 37:09

That's on the next slide. I think

Susan Nicolson: 37:11

There you go.

Mandy Neat: 37:13

wwOkay, before placing a sign or publishing to an electronic medium, you must have the owner's written consent. I'm going to go into that as soon as I'm done with bullet point three, which is brokerage name needs to be prominently displayed in electronic advertisement without the need of scrolling at the very top item of everything you advertise with. The most important thing is, who is your brokerage? Why? Because the consumer needs the ability to reach your broker. So when you're thinking, Okay, I'm going to advertise my services, before you even fit your name in there, mentally, you need to be able to fit your brokerage in there. So one of the biggest things I say is, if your topic, just like Susan or commissioner just said, if your topic is to advertise Real Estate Services, then my brokerage needs to be with my name before a phone number, before a contact, before a team name. A great way people are doing this on social media is that where their name is listed at the very, very top their Geo coding by saying at and then they're tagging their brokerage. So then it would read like, Mandy neat. Mandy neat at ABC Realty. And then there's my post, but then let's go into those videos, right? So a lot of you make videos, and the videos are awesome. I love videos, but they fail to say who the brokerage is, because the print with the video said it, well, you you have to remember if those videos can be standalone in any concept. I use Facebook reels as an example that doesn't have the print with it. You need to say who your broker is. It really should be displayed as well. You can always add in your brokerage logo and your brokerage name at the front. Brokers out there if your logo is not clear with your full legal name or DBA Name. Redo your logo that you're using with your agents, because you can't just have a big letter out there when the whole name was this and Associates Realty, I need to see that full name, and then you wouldn't believe it. But people think they can put signs in people's yards without the written permission of the owner. You can't do that, but you also can't share people's properties through advertising without written permission. And I'm talking outside the IDX. If you've ever been to a luxury open house, the whole point of the luxury open house was to get people from all brokerages to come take advertisements and find buyers for your seller. Right? You're promoting your clients property, just like the listing agreement said. But did you have written permission with that seller to allow people that don't represent them to also come in? Information and take video and be posting those to the website. So I need you to think beyond MLS. I need you to think beyond IDX fees. I need you to think, what do I have my sellers written permission to do when advertising their property, which is a great reason to create more value add at your listings, at the presentation table, but at the end of the day, we need the owner's written consent.

Susan Nicolson: 40:25

aI mean, we do need you to have a signed listing agreement before you put it in the MLS too. I mean, you know, it's always preferred. It helps us a lot, because it and it doesn't always happen. No sloppy real estate. You know, I know things are always rush, rush, rush, and I have five minutes here and I have three minutes there, but there's, it's just like algebra. There's an order of operations, like written consent comes first before you start deploying your marketing.

Mandy Neat: 40:53

And even though I really shouldn't go down a different pathway, I'm gonna take 10 seconds to have you write this down if you're taking notes. A, as an apple, R as in revise, as S as in statute, A.R.S 32 dash, 21 51.02 I'll put it, I'll try to put it in the Q, amp a section, or I'll send it over to Judy to send to everybody. But that's your employment agreement laws in all terms and conditions of an employment agreement, which includes listing a property and price changes, needs to be in writing and signed by all parties. So think about that next time you go to make a change to that MLS, do I have a text message, or do I have some type of written communication that's signed off on by that seller?

Susan Nicolson: 41:40

Yeah, I think most MLS is provide a full change form and a place for your client to sign it. Use them. Use use your tools. Okay, compensation, since you are already on it at least three days prior. I, you know, it's so funny to me when this is a requirement that's always been in law for as long as I've been practicing at least 20 years, that you had to have these disclosures, and all we did was say, Yeah, could you do those disclosures at least three days prior? Because we know that consumers feel a lot of pressure at the closing table right, there's moving trucks that are full, there's things to go there's timelines, there's logistics that are in play on closing day, many times, especially in back to back closings, or triple in a row closings and that kind of a thing. We are saying, if somebody provided representation, so we have some form of agency happening, and they're receiving money, then three days prior, all the parties in the transaction should know who was involved in the professional representation and was receiving compensation out of this transaction. So that might be you used a showing service, and that person had implied agency, and they showed the house okay, they need to be listed and disclosed three days prior, because if something bad happened at that showing that could have prevented harm from the consumer that a licensee should have caught and taken care of, we have to know who we're holding accountable there, right? And also referrals. People got very, very confused when we said this, oh my gosh. Are you telling me I have to disclose how much I'm paying in a referral fee and blah, blah, blah, blah, blah, nowhere in here does it say that you got to tell us how much? It just says who did this and received compensation. We don't need a breakdown of how much money went there. So here's the thing, with a referring agent, if they just refer you the business and then they're like, You know what? I sent you to Mandy. She's the best of the best that I know in that area of real estate. Enjoy working with her. She's lots of fun. And then that person just sits back and waits for their check to come in the mail until Mandy's done with that transaction. That's great. We don't need any disclosure. But if I refer to Mandy, and then the person that I referred to Mandy comes to me and says, Well, I got this inspection report and I got this this, and what do you think about this? And I start giving real estate advice, because I'm a licensee and I have that kind of knowledge, and I butt my little nose into the transaction. I'm receiving money, and I'm providing licensed real estate services, and if I'm an out of state agent, I'm breaking the law because I'm providing licensed real estate services in Arizona without an Arizona real estate license. So that is how all of that works. That is what we need to see. We don't care how you do it. It's disclosure. So, you know, send an email, send a form, create a form, use this. Use of that. We don't care. That is what has to happen. And it has to happen three

Mandy Neat: 44:40

days before you're closing. And the big thing guys is, this is not new. I've I've heard so many people say, Did you see that new rule from the commissioner? And they're like, No, it's just that we all relate on a settlement statement, because it said, prior to close of escrow, okay, we want to jog that brain of that buyer and seller, what are you paying for before they get to the closing table? And that they're just forced to sign whatever's in front of them in their minds, because a mentality matters when you're reviewing. We did have a question, Commissioner, and if you don't mind, before we move on, just to answer that, we can answer it real fast. Nicole cumby, Hi, Nicole, by the way, nice, nice to hear from you. Said, is your listing agreement sufficient for assigned acknowledgement for advertising, or do we need a separate agreement? Here's the thing there, we don't know what your listing agreement says. Your listing agreement it per article 26 of the Constitution could all look totally different and say different things. What I'm telling you is that it needs to be clear, non ambiguous, and it needs to show written instruction on how you're advertising electronically. So when you read your listing agreement, if the seller has confusion on how you're going to market it, and it's not clear to what you're about to allow somebody else to do on their listing, or what you're about to do on their listing for marketing, then it's probably not clear enough. So I would just say, go back. You have to tie all the laws together. Go back to 32 dash, 21 51.02 and say to yourself, Does my employment agreement give all terms and conditions in a non ambiguous way? And also find a friend that's not a licensee. I know that's really hard in our world, and ask them, What does this mean to you? And if they go, I have no idea, then it's still ambiguous.

Susan Nicolson: 46:25

Yeah, and you know? And here's the thing, guys, protect yourselves, because I am here to tell you, from this side of the desk, your clients love you until they don't love you, and then they hate you. And and it happens to great agents all the time. And the agents think, well, I was, I was promoting their property, you know, I was, I was doing everything I could to give it maximum exposure, to get the highest and best offer. And the client is like, I never agreed to that. And so you probably want to just given our experience, if Mandy and I were out there practicing, you can darn well bet that my listing presentation would hold a whole conversation on the slew of every way that I might market the property, and I would be getting consent. Because when you sit in this office, you're like, Dang and you feel badly for the agents, but the law is the law. And you know that that agent had a good heart and thought they were doing all these wonderful things, but people are, you know, they're funny little preachers, and if it's a violation of law, and if it wasn't in writing, and you can't show us that you had permission, then we have to take disciplinary action. And, you know, sometimes it's painful for us because we're just like, gosh, you know, we know that agent didn't mean it, but there's nothing in Arizona revised statute that says, But commissioner and deputy, you can be weenie, and if they didn't mean it, you know, there's actually something that says, like, the opposite of that, and says they didn't mean it, which means they were incompetent. So the laws doesn't weigh in your favor. In this area, you really need to have a very high level of specificity for what you're doing out there. And you know, I see it happen more even where you have real estate licensees who are super comfortable with that particular client and and then all of a sudden something happened. And you know, just in this day and age, you might make a political post, and that person might decide they hate you because they have the opposite thoughts, right? It could have nothing to do with real estate, but now they hate you and they want blood, so please just protect yourself. Just be very specific in your conversations. I feel like my listing presentation after having been commissioner would be like five hours long now, because I'm so paranoid, I don't think I can ever practice real estate again. Anyway, all right, moving on, my favorite word expeditious. So it used to say as soon as practicable. And then there is another area of law that said expeditiously and and we just like it to not contradict each other or not give different measurements for the same thing in different areas of the law. So now it reads consistently across the board, expeditiously. We expect you to perform the duties that you have as a licensee to your client expeditiously, and that means without delay. But you know, I mean it allows for reasonable delay in the Black's Law Dictionary of how that is but, but it does mean this is not something your real your real estate obligations are not something to be done after you've had a nap, because you were just kind of tired that day, and then you kind of forgot, and then you had to pick up the kids, and then you had to this, and then you had to, like, we get that life happens, but you've got these fiduciary duties and timelines. We need you to do things expeditiously.

Mandy Neat: 50:02

So guys, please keep in mind this is not changing really what you should have been doing in the first place. Because just this section's in our 428, 802, when you look at our 428, 1101, professional conduct, which you've been living in every single day, you do real estate in subsection C, it already said you had to expeditiously perform all acts resulting from the holding of a license, so you were already in violation. It just was about conveyance of documents that as soon as practicable, practical and at the end of the day that that is an item in the holding of a license, you can't just unilaterally decide not to present offers to your client until it's convenient to you. You have to make them aware, right? So make sure that you understand that we just lined a lot of things up so you had some great clarity.

Susan Nicolson: 50:51

Yeah, okay, documents, broker records. Yeah, if it's signed, we want it to be maintained in the broker file. So there we have had those come and argue to say, I'm not responsible to maintain that in my broker file, I'm only responsible to maintain this and this and this. And again, there is some ambiguity between statute and code. So we made code match up to statute and or actually, I think we kind of just are very much clarifying that any documents that are signed by parties in a transaction should be part of the transaction file. Mandy, you look confused.

Unknown: 51:28

Oh, Judy asked a question.

Susan Nicolson: 51:30

Oh, go ahead answer Judy's question.

Unknown: 51:34

just Judy said, our current MLS rules do not allow branded videos in the MLS. And that's correct, because you guys can't, you know if somebody else is under an employment agreement, you can't go poaching each other's clients just for a good time. But again, that's exclusive, and that's again, that law I keep telling you about. But she said, as you are aware, these videos go out on the internet, is this rule putting our members at risk of violating our A.R.S 420, 850, 2e, and the quick answer in my mind is that when videos go out through IDX feeds of syndication, that video is attached to a listing which says the listing agents information on the listing. It's not a standalone video. The video could be at risk if it just went out there as a blind ad. So a blind ad has always been not allowable, and a video alone, without any branding, but for the sale of property, is a blind ad. So Judy, I would just like to get with you on looking at exactly what you're asking me offline, because I believe, I believe those videos are attached to the listing information when they're syndicated out, which would show the listing agent and the listing brokerage.

Susan Nicolson: 52:52

Yeah, I believe it comes with other listing information, and then you click into videos and photographs, and so it's going to be in compliance coming out of an MLS. But if you were to just download and extract that video and then upload that to your Facebook page without any other listing information in there, and now we have a blind ad, and your Facebook page says nothing about your brokerage and who you're with, and that's where it would become problematic. Hopefully that's clear. Okay, licensees duties. A licensee shall disclose in writing to all parties any known adverse material fact concerning the property or material defect. I don't think that is new to a single person that is on this call. I mean, that's very consistent with how we have been trained. You have all been trained for your CE classes, but we had to do some things in clarification of the rules, because we learned how attorneys work and and we were like, Okay, we will make that even clearer than it was before. So we brought the rule up to how licenses were already practicing, and a licensee shall expeditiously. There's that word again, perform all acts required by the holding of a license. And here's the new part, if you are unable to perform your duties, something has happened, but you're in the middle of a transaction, and there are time periods and there are deadlines and there are expectations, or you're not even in a transaction, but you have a listing, or you're working with a client, then we need you to contact your designated broker, or broker with delegated authority, who the broker is delegated to take these kind of calls and say, I can't perform my duties. I need you to either take over my transaction or assign it to somebody else. But we can't have the client be the person that is harmed because you couldn't complete your job because you are taken out of commission for the ability to do it. Okay, a licensees duty with the scope of expertise.

Mandy Neat: 54:58

I love this section. Oh. Okay, here's the thing. Do you know what a UCC one filing is? If your answer is no, you need to pair up with somebody or obtain permission after disclosure of your knowledge base of solar homes and still be hired by a client, you need to know information on that solar home. So now we're saying your competency level has to be in the area in which you're practicing right.Commissioner,

Susan Nicolson: 55:26

Yeah, it used to say that your competency level, you were considered competent if you passed the real estate exam. And I don't know any licensees that would stay there 90 hours of pre licensing and passing the exam set them up to be able to sell easements or commercial properties or, you know, probably even raw land. I mean, there's just a lot of things that you need to learn. You need to have a broker who is teaching you, or you need to have a mentor under your broker who is teaching you these different things. Because the real estate exam does not cover all of it. So scope of expertise, again, I don't really feel like this is anything new. I think licensees already understood the scope of expertise. We just took out the portion that said, if you pass the exam, you have the expertise. Because that's nonsense. Okay, licensees duties.

Mandy Neat: 56:22

Well, didn't know we had to do this. I can't even believe you know I get complaints all the time about licensees, and I'm just blown out of my mind. Now get the I only get bad calls, usually like so if anybody wants to call me with really happy news, please, please feel free. But somebody just yesterday complained that a licensee entered a property without permission because their appointment time wasn't for another two hours, and they entered early because they showed up early. Guys, guys, that's access. You know, who has to grant you access the owner? It's they usually do it through the listing agent, but the owner that is called breaking an entry, they can call the police on you stop doing that.

Susan Nicolson: 57:08

Yeah, you know, and transfer of keys is another thing, right? I get that you may not be physically in town the day that a close of Escrow happens, but you need to, as a professional, make arrangements, give permission, lay that out, is to exactly how that is going to happen. You can't give access to somebody to the property prior to them owning it. Or, you know that, like there are just things that that you can't do, and one thing that you absolutely can't do, I guess you can wait until our court case is done because this person's deciding to challenge me on it. Your real estate license does not enable you to just walk into somebody's house and be like, Hey, are you interested in selling your house? Like we had that happen. And the homeowner was like, Who are you, and why are you in my kitchen? And why did you just walk into my house? And you know, this person was like, I'm a real estate agent, no does not give you permission to walk into people's houses on uninvited so, I mean, it happened, right? You can't make this stuff up. Mandy and I could write a book like you guys would not believe we could call it Mandy. You wouldn't believe this

Mandy Neat: 58:20

Happens in real estate. Did you know that licensees think it's cool to set appointments through Align showings? Well, here in the valley, at least, and then take a whole camera crew to the showing and actually create video advertisements of that listing, and never show it to a buyer, and then they're surprised to find out the owner realized what they did, because, you know what, owners have cameras, and they're not okay with you making an advertisement of their property, and then the agent's like, but I don't get it. I think everyone gets it here, though,

Susan Nicolson: 58:53

You're not already doing this, like, pro tip from the commish. Hey, I could have a new podcast. Pro tip, please assume you're being recorded, both on video and audio. Every time you're in somebody else's house. They do that a lot. It happens

Mandy Neat: 59:13

so again, authorization, and now that you moved on to A.R.S 1102, I am so sad. I am so sad.

Susan Nicolson: 59:20

Mandy did not like it, but I struck this law. I was like, That is crap. So once upon a time, back when I think it was kind of like back in the days when my dad was practicing, real estate brokerages were pretty small, you know, that designated broker when my dad was practicing, went to listing presentations with my dad until he felt that my dad had the competency he sat there at the kitchen table. It brokerages used to be much smaller, but that is not necessarily the business models that we have across Arizona right now. And so there was this law that said, if you're being ghosted by the other side of the transaction of. And you have to contact the broker and every representative of that broker before you can go and directly present your offer. Well, every single licensee at a brokerage is a representative of that broker, and so you may have to contact 7000 people before you're able to go and present that offer. And, you know, Mandy used to be a real Bulldog of a managing broker, and she would fight hard for her agents. And she loved to cite that when somebody would call me, like, we're just gonna go and present those offer. And she was like, No, you're not. And, and it was because there's a lawyer lawsuit, and, and she was right, because she was, you know, that's, that's how you read, pause, you know, what is the direct interpretation of this? You don't get creative there. And so new law basically says you have to contact the designated you try to reach the agents that are on the employment agreements. You got to try to reach the designated broker and anybody with that delegated authority from the broker, so those managing brokers, and then after that, go get some written permission from the person, like, Hey, can I present this offer to you? Yes, okay, sign this, but says you're giving me permission to present this offer to you, and then go and present your offer. So a much more streamlined, reasonable process, given the reality of how a lot of our brokerages operate inside the state. Hey, that covers it well.

Mandy Neat: 1:01:22

And before you move on, Commissioner, you actually helped him out even more, because it used to only be in regards to the listing side, and you actually added the side when the buyer's agent disappears and you can't get a hold of anybody, what can you do? And the big thing, guys, is between that communication to the agents and the brokers, you have to wait 24 hours. So that means you're documenting what you're doing before you reach out to their clients and ask for that written permission. Thank you.

Susan Nicolson: 1:01:51

Okay, supervision. Oh, and Mandy's favorite word and control.

Mandy Neat: 1:01:56

Yeah, they said reasonable supervision. Mandy, how is that reasonable? And I would go, wait, wait, wait, I swear. I swear, there's an and and I found it, and it said and control. So it was never reasonable supervision alone. It said reasonable supervision and control. This is why you need to be nice to your brokers. Yeah.

Susan Nicolson: 1:02:17

So here's the thing. We had too many brokers come to us and say, Well, I don't know how you expect me to control these people. They're not my employees. They're 1099, contractors. And like, exactly, what do you think we can do? And we have that happen too often, and so the answer is a progressive penalty policy across all brokerages. So if you are in violation of a broker policy and procedure that is trying it, that is there in your policies and procedure, because it is keeping you in compliance with Arizona law. Then and you violate that part of the policies and procedures, which means you broke the law, then your broker has to use a progressive disciplinary policy for those types of violations. Because what we have seen that does not work is the broker, you know, Mandy turns in her paperwork late. Hey, Mandy, don't do that. Then next transaction. Mandy turns in her paperwork late. Mandy, come on, don't do that. Then the next transaction, again and again and again, and it's just rinse and repeat. You know what is not control. Hey, Mandy, don't do that because that's just not working. That's not controlling Mandy's bad behavior. And so we did not dictate what the progressive discipline is going to look like. That's a business decision from one brokerage to another, but all brokerages must have something there. And honestly, as harsh as that sounds, please believe me when I say you want to resolve these things at your brokerage level. You do not want them to reach the Department of Real Estate level. You want to as early as possible. If you are the personality type that can't take a verbal warning and do that corrective action. You know, if your broker has to withhold some of your commission or issue a fine or whatever it is that they're they're going to do, and that's what it takes you to learn it's much better than facing an investigation and disciplinary action against your license, like learn your lesson at the local level and not at the state level.

Mandy Neat: 1:04:22

In case you guys don't realize, her example, Commissioner's example of turning in your documents in 3221 51.01 it specifically says a broker has to review within 10 days all documents that have a material effect upon a party. Do you even realize, without a broker's ability to review, that if you put in any terms that were unlawful or not able to be upheld, it wouldn't be corrected in time. So by the broker not being able to review, you could actually be harming a buyer and a seller. So you need that review period done. One of the biggest things I see is the buyer and seller think they. Have the ability to agree to waive disclosures. Here's what I can tell you, you can't waive the law, and a broker could catch that right. A broker's job is to catch that and say, hey, hold up. This term is actually unlawful. So please note I'm not here to give you legal advice. I'm here to tell you there's a reason you need to be timely, and there's a reason the broker needs to take steps to have a system to be able to do the things that they're supposed to be doing. Thank you for participating with that.

Susan Nicolson: 1:05:28

Yeah, we've used the example before that if Mandy and I are on the interstate and the posted speed limit is 65 miles per hour, I can't look over to Mandy and be like, 65 is lame. Let's go 80. Are you good with 80? And Mandy's like, Yeah, I'm good with 80. And then a state trooper pulls us over. Is like, you're going 80 and a 65 and we're like, Oh, it's okay. We agree that it was okay. That's not how laws work. You can't, you can't have, like, a mutual agreement between parties that disregards a law that just doesn't work. So we had a hand raised, but I don't know, we're on a webinar, so I don't know if that person has the ability to unmute or if they have to use the chat.

Mandy Neat: 1:06:06

So we've answered seven questions in the Q and A section, in case anybody have the same questions, I've typed out answers to all of them. And if you can unmute, well, we're more than happy to listen. Yeah, I don't see anyone's hand. Oh, maybe it was an Oopsie.

Susan Nicolson: 1:06:30

Maybe it was an Oopsie. All right, so I think this is almost the last slide notice of representation. If you get into a little bit of trouble with the department, a lot of people, their first thought is lawyer up and and that's great. That's your your rights. You have the right to have counsel, but we need you to give us the rules of engagement when you lawyer up. Do you want us to still send you and your lawyer notices? Do you only want your lawyer to get the notices? Do you only want your lawyer to get certain notices because they have high billable hours? Then, you know, don't bog them down with all this communication, communicate with me. Please. We need the rules of engagement. We will be more than happy to respect your wishes and communicate with you and your council in whatever way you prefer. So if you do get into trouble, I really hope you don't, but if you do get into trouble, what we would ask is that you will receive a request from this department. If you tell us that you have counsel, we'll say, great. Tell us how you want us to work with your council.

Mandy Neat: 1:07:26

Uh, okay, let's talk about before you, before you move on to deed fraud, Commissioner um Gary Nelson has one more question about reasonable supervision and control, um, and his questions about clarification on the concept of what the broker's responsible for on the agent's personal purchases. And I think what he's alluding to is AAC r4 28, 1103, a one, where we added one word to make it clear that a broker is responsible for licensees transactions. And what we mean is if a life a licensee has the right, as long as it's okay with their broker, because the policy and procedures can say so they go outside the brokerage and be a party of a contract without representation, they still have to disclose that they have a license. The broker is not responsible for that if it doesn't run through the brokerage. But the moment a licensee uses a tool that they only have the ability to use in that transaction because of the holding of a license, then that does fall within the brokerage, and that is the responsibility of the broker. Commonly, the one of the tools might be the forms the broker has adopted to use. Did they go use a staples document, or did they use the one from the broker? It might be the MLS. Are they advertising it through the MLS, but they mean to be a for sale by owner. So those are the things you have to look for. What tools did they utilize when they made personal purchases? Because if they utilized anything based on their license, then that does go through the brokerage.

Susan Nicolson: 1:09:04

Like, if I were still a broker, my policies and procedures manual would have like an initial off here. If you're going to do a real estate transaction for yourself outside of this brokerage, you need to acknowledge and understand that you may not use any tools that are provided to you because you hang your license here, which include, and I would probably, you know, have a nice list there about forms and MLS and other tools that are provided, because as soon as they start utilizing tools that are provided to them through hanging their license at your brokerage, now they involve the implied agency of the brokerage. Okay, hopefully that helps defraud you guys, if you've, if you've taken the defraud class, thank you. If you haven't, you will before you renew your license, because it's a requirement. But oh, since I became commissioner, we've tracked 84 cases. Haven't looked at the log honestly recently. So. Could be higher than that, but 83 or 84 cases here, and then the criminal investigator that we partner with at the Attorney General's Office has tracked over 200 it these criminals. They don't care if you're a Republican or a Democrat or part of a protected class or not part of a protected class. Like they don't care. All they care about is you own property, and they have the ability to steal it from you. So what we know about these criminals, they they do identity theft. That's That's step one in in what we see in a lot of these cases. So they've done a good degree of identity theft. They've made false IDs up, and now they are ready to impersonate you, and they use that impersonation to go about and sell your real estate. So currently, we have no systems in place in the state to stop them. We hope that maybe the notary will catch on that that's not a legit ID. We hope that maybe the title company will say something fishy going on here. This doesn't line up, or this doesn't match, but we really have no way for an Arizona property owner to sort of protect themselves from this crime. We have at every county recorder's office a notification that after a deed has been recorded. You can get a notification if you sign up for that. But what happens when a deed is recorded, it transfers the ownership of that property. So now you have a property with a cloud on title, and we know from polling with attorneys that it's 13,000 to $20,000 on average for an easy, quiet title case. But if it's a complex case, then it could run into, you know, much higher fees. And so just to clean up your title and have a marketable title and maybe get your property back, you're you're looking at a lot of money. But in Arizona, if the buyer bought property and they didn't know it was stolen, you are not very likely at all to get it back, because the buyer's money is gone, and they didn't know they were buying stolen goods. And so after having far too many people come into this office, utterly devastated, financially ruined, I knew that something had to be done. And we're doing an IT modernization project here at the Department of Real Estate, and one of the things that we can include is an early alert system in this new technology, and what that would look like is when you send an order for escrow services, so you're opening escrow, and the escrow officer has pulled a preliminary title report. So now we know the escrow officer has all the information about the property in one of five different ways. The escrow officer has to notify the Department of Real Estate that a transaction is happening, that a sale is going down. They can do it through an API Bridge, which is a automated, computer coded bridge. We will create the consumable API. I mean, you can use, like, some Claude AI coding and match those little suckers up. It's not it's not very complicated, and that would transmit over to the Department of Real Estate. But if you don't want to use the API, you could do it by an Excel spreadsheet upload. You could do it by CSV sheet document upload. You can do it as a fillable form on a web page, or you could even send an email to a specified email address, what information has to be transmitted? What title company, escrow company are we working with? Who do we contact there in the event that we have a fraudulent sale potentially going down? What's the owner's name? What's the assessor's parcel number? Is there a CITUS address? Is there a mailing address? Give us that if there is one, if that exists, five little, tiny pieces of data at the slowest way to do this, copying over that information and typing it into a form. It took me 52 seconds. Then that would come over to the Department of Real Estate. And the Department of Real Estate would ask all of you to reach out to every person you have ever sold a home for, and said, Please register for the early alert system, just in case you're ever targeted with identity theft and they try to steal your real property. So you get a notification. What a great way I would do Popeyes to everybody I ever sold houses to. Maybe we can make so much money we should go back intoprivate practice anyway. I always think of these marketing ideas as I sit here as commissioner, and I could do nothing about them anyway. So we're going to register those Arizona property owners, and now that property owner, it'll be a better system, because you learn from the past, right? So you can choose, I only want to receive notifications by a parcel number. You know? I don't I don't want to receive John Smith, because my name is John Smith, and there's 10,000 of me in Arizona. Please don't tell me every time John Smith is selling a property. So you can choose how you want to be contacted, what information you want to be the trigger. Then you can tell us, do you want it by text message? Do you want it by email? But it has to be electronic. You can register your parents properties if you have older parents or aunties and uncles or people that might be susceptible to some of the scams that are out there. To kind of help out and find out early, and and, and then you get a notice. And that text message notice would say, this property, and you know the details is in the process of being sold. If you're the rightful owner and not selling this property, you may be an A victim of identity theft and deed fraud. Click here to be connected to the Attorney General Criminal Division. Click here to be connected to the Department of Real Estate, special investigations and and you know, and those links will take you either or you can do both. It doesn't matter. And then we're going to have a rapid response team and policies and procedures. And so the bill is proposed. There's no cost to title companies to join. There's no cost to the people of Arizona to sign up for it. It's minimal operating costs that the Department of Real Estate can absorb. The creation of the system itself can be wrapped into our current it modernization. There's a window in time where we could actually do something about this, and give all of the people that we've helped throughout the years in buying property a fighting chance against these criminals that will gladly steal their equity or their properties. And so I'm super hopeful. It's called House Bill 2842 has broad bipartisan support. However, we do have an active lobbyist down there at the capitol that is working very hard to kill this. We anticipate that it could die at rules committee. So the chair of the Rules Committee is Lauren Hendricks, oh, I have to time this business actually goes into lobbying. And basically, you know, if, if you're a politically active person, if you, if you feel that this is an important thing, we could use all of the support on this bill that we can you can go to az ledge.gov, and just look up the bill tracker. Type in HB, 2842, with no spaces. Read it for yourself. Understand it. And if it's something that you think like, yes, we need to have that, please support it. If I never have another person walk into my office trembling and shaking and crying because they have been financially ruined because somebody stole their identity, it will be too soon, and yet I know that that's still going to happen right now, so we have the ability to do something. I really, really hope we're going to be able to we have a hand up for Marina.

NAAR MEMBER: 1:17:30

I have been saying this before, and I will continue. I think great transaction. She have the sellers fingerprint or their representative, because that's that will be the easy way to track who sold the property that wasn't there.

Susan Nicolson: 1:17:50

Yeah, the problem with fingerprint is it's another after the fact. It's not going to enable a consumer to stop the transaction from happening, necessarily. It's a nice tool. Don't get me wrong, we would love fingerprints for all transfers of real property, because it enables law enforcement to catch the bad guys. But we still it's not early enough. It's not early enough to give a property owner the opportunity to say, hey, hey, hey, I'm not selling my house. What's going on here? And the early notification is wonderful for law enforcement, because they can jump in there and actually stand a chance to catch some of the bad guys that are the branch of these criminal organizations that are here in Arizona helping to facilitate these crimes so But yes, then the inflation out there four fingerprints, though.

NAAR MEMBER: 1:18:44

no, I was gonna say something else, really quick. The post that the hires through the title company does not protect them from from this kind of transaction.

Susan Nicolson: 1:19:00

I mean, you know, there could be very expensive, probably, you know, extra, extra policy that somebody could buy that might cover fraud after the fact. But the typical owner's policy, it's going to take a look at everything that's been recorded. And then, if you're reading your Schedule B very carefully, you'll see that what's not covered by this title insurance are things that are not yet recorded. And so if this, if the fraud, happens after the fact, what we have heard from many, many victims is their title insurance policy does not cover them for that. So title insurance takes a look at you're buying the property. Is this title free and clear as of this day? Not what happens to your property in the future. Any other questions? No, okay, so you guys are in Northern Arizona, if you do want to be able to have civic engagement and participate in the. Saying, Yes, I like that, or No, I hate that. On different pieces of legislation that are going through, there's a system down here at the Capitol called right to speak, or register to speak RTS. It's the RTS system. And to register for you physically have to come down to the capitol and use these computers that are at the Capitol, which is not very practical, but there is a nonprofit organization out there called civic engagement. Beyond voting, they have volunteers that will go and register you in the system. They have training videos that will show you how you can become engaged. It's not Republican, it's not Democrat, it's just civic engagement. It's just, you know, we are your democracy. We are. We are your government, and you have a right to weigh in on bills that are being proposed and and participate in civic engagement. So if anybody wants that, if that's something you're interested in, that's kind of a convenient way that you can do this from Flagstaff without having to make a trek down here to the Capitol, and with that, thank you. Thank you guys for joining us. We're happy. Mandy and I are happy to take any other questions.

NAAR MEMBER: 1:21:19

There's one. Hold on. From Beth. Go ahead. Beth, okay, um, I have a quick question on advertising for like, our agents that post on, say, Facebook or Instagram in their name, if their name says, you know, John Smith, brokered by WM partners. Is that sufficient? Or do we need to have their their brokerage again in the post,

Mandy Neat: 1:21:51

Because he was asking it, I think she's gonna pass that one to me. Beth. The thing is, you have to be able to look at these items and say, Is this a standalone where they're always going to see this information, or is this always going to flow? So I, I'm a Facebook dork. I can't like every time I check my Insta, it's like it's been two months, and I have all these videos sent to me. So I only can really speak well for Facebook, off the top of my head, at the very top, where you have your name, and you did exactly that. You said Justin with WM partners, and it spells it out equal to Justin's name. And then there was the post. As long as that all stays together, we're good to go. But now if that post goes without Justin and his brokerage name, we have an issue. Sure.

NAAR MEMBER: 1:22:37

Okay, yeah, yeah, no, that helps. Thank you.

Mandy Neat: 1:22:41

Yeah. And your new your broker is very kind. I met with Lauren

Susan Nicolson: 1:22:53

You have a question? Hi, Gary,

NAAR MEMBER: 1:22:56

hi commissioner and vice Commissioner. Nice to see you both. I think it's vice Commissioner. What is it?

Mandy Neat: 1:23:03

It's deputy. It's like, Bob Marley.

NAAR MEMBER: 1:23:05

It's the word sorry.

Susan Nicolson: 1:23:07

Mandy walksaround the office and she's like, that's

NAAR MEMBER: 1:23:15

That's funny. Actually, not the deputy. So my question getting back to education and and as you know, we rubbed elbows with all this back in our younger years. Of course, let's call it that way. But you know, I would wonder if you would mind being open to having a conversation, because there's obviously all three of us feel, and many other people here feel, that there's a difference in education. What what agents and realtors specifically are learning. Would you be open to having a conversation about limiting online online education, the amount of hours that you could have in a two year period, and perhaps maybe

Susan Nicolson: 1:24:07

it would take a statutory change, and I would full support of that, because I, I, I know how many, many, many licensees are not actually actively learning when they're doing distance learning, you know, like it could be great if you were actually reading everything and learning, but it's not so Gary, it would take a statutory change, and you are very active in a particular organization that has a lot of poll down there at the legislature, and you would enthusiastically have my support, because I believe in quality education,

NAAR MEMBER: 1:24:49

and we do too. And obviously, as you know, that organization does as well. It's just, you know, there as as a broker and as a practitioner. Center I get I try to have my butt in a seat as much as I possibly can. As a broker, I find it difficult to get broker management clinic done, but online only, so I use the companies that are very good at that, and I do believe I'm getting quality education from that. But let's face it, all of us know that you can cheat the system a little bit on the amount of time that you are. You know, if I already know the answer to a question, I can answer that question and kind of sit there for a few minutes and let my clock run out. Let's that's the way it is, right with with learning.

Mandy Neat: 1:25:35

So I've always said the one thing you learn in distance learning is how to click the Next button.

NAAR MEMBER: 1:25:40

Wait The next button it. But again, I'm using reputable companies that we all know and but you could still do that. So thank you. I will have that conversation offline with you individually later. And of course, with

Susan Nicolson: 1:25:53

I can tell you I highly doubt it would be something I would be able to create as an agency bill, because it would be seen as limiting businesses and competition and things like that on my end. But if it were a bill, I could enthusiastically support it

NAAR MEMBER: 1:26:17

As a practitioner. And I think you guys know this, that there is a difference between what somebody is learning and what they have learned, and the distance learning is the culprit on a lot of it. And would we rub elbows with people? And it's obvious that that's the only education they're ever getting. So thank you. Thank you,

Susan Nicolson: 1:26:41

Marina, your hand is still up. Do you have another question?

Mandy Neat: 1:26:54

Nope, um, and just one thing to add on the distance learning. Just in case you guys are thinking they're getting harder. We are not renewing distance learning courses any longer that just have yes and no questions and fill in the blank, they have to have scenario based interactions and questions, which means you actually have to pay attention in the course to answer the questions and what they're asking based on a scenario. So it's not memorize it and Google it. It's now going to be you have to apply the knowledge. So hopefully that's what the department's been able to do. And we've been making all courses require interactivities with their students, so it can no longer just be, I'm speaking at you for 50 minutes at a time. You have to be included in the course as well. And if you're not someone who likes to participate, you might not get CE credits. So you might want to force yourself to participate, because you have to participate when you represent somebody. So help us out.

Susan Nicolson: 1:27:51

I have a meeting in two minutes that I have to attend, so I can take probably one more question, and then I have to go. Can you hear me now? Yes, I can hear you now.

NAAR MEMBER: 1:28:02

Sorry, okay, I have a question about the earlier alert system. I don't know if you told us how to register there.

Unknown: 1:28:14

It doesn't exist yet. So there's a bill that would require the title companies to send us that information, and if the bill passes, then we'll be able to create it and have it up and running pretty quickly. So you would get we, I will do, I will do a huge amount of releases, and you'll be like, yeah, yeah, Commissioner heard this already. Like, you're going to hear from us if we get this through. Because there's just, it's devastating when somebody has their property stolen. So if we can prevent it and and do it in a common sense way, I'm all for it, and because we're going through it modernization, we can actually do it. There's this little window of time where we have the software developers here, and we can just include it.

NAAR MEMBER: 1:29:00

To wanna wait that police recoup that for the owner if they can prove it was theirs. Why should I lose my property if somebody buys it and that's it's kind of backwards, I think that way to say, Oh, well, they bought it and it was stolen. So too bad for the seller. I didn't ask.

Susan Nicolson: 1:29:24

We didn't make the laws though, you know that's just the way the statutes read in Arizona.

NAAR MEMBER: 1:29:30

Yeah, we can fight back. He said, No, this is not right.

Susan Nicolson: 1:29:34

Yeah, okay, I have to run. Thank you very much. Northern Arizona. I appreciate you joining us today. Thank you, Judy for arranging it. Hope to see you soon. And yeah, thank you guys. I appreciate it. Bye.