Bulletin: AZ2024002

Dear Associates:

The Arizona Legislature adjourned its marathon 2024 regular session sine die June 15, 2024. The following is a summary of legislation of interest to the title industry. The general effective date is September 14, 2024, unless otherwise specified.

BILLS THAT PASSED

SB1042 (Title companies; recorded documents; DIFI) [Chapter 103]
Outlines the enforceability of an agreement to indemnify a title insurer from risks arising from a properly recorded instrument exclusively for that instrument if the agreement meets certain criteria. Amends ARS Sections 20-1591 

SB1218 (Exclusive agreements; residential property sales) [Chapter 78]
Prohibits an “exclusive property engagement agreement” (“Exclusive Agreement”) (defined) from lasting longer than 12 months, being a covenant that runs with the land, or binding a future owner unless the future owner acquires an interest in the real estate after listing services have begun and a broker has a purchaser for the real estate. Prohibits an Exclusive Agreement from being recorded, authorizing an encumbrance on the property, constituting an encumbrance on the property, or allowing for the assignment of the Exclusive Agreement or the obligation to provide underlying services without notice to the property owner. Requires the Exclusive Agreement to adhere to state law pertaining to real estate employment agreements. Stipulates that an Exclusive Agreement is void if the listing services do not commence within one year after execution. Prohibits a court from enforcing an Exclusive Agreement made or recorded in violation of this legislation and from imposing a constructive trust on the property that is the subject of an Exclusive Agreement or on the proceeds of the disposition of a related residential real estate transaction. Stipulates that any contract or agreement made or recorded that violates this legislation is void and any consideration paid to a homeowner must be forfeited. Requires the Arizona Department of Real Estate to post notice in every County Recorder’s office and on the Department’s website that disclaims the validity and enforceability of an Exclusive Agreement or any other liens or assignments that violate this legislation. Stipulates that violations are subject to liability and penalties through civil action and actions by the Arizona Attorney General. Contains a severability clause. Amends ARS Title 44, by adding Chapter 5 

SB1432 (Unlawful restrictive covenants; uniform act) [Chapter 58]
Permits an owner of property subject to an unlawful restriction to submit an amendment to remove that restriction to the Recorder for recordation in the Land Records office of the county where the property is located. Modifies the definition of “governing instrument.” Permits the governing body of an association of owners to vote to remove an “unlawful restriction” (defined) without a vote by the members of the association. Permits a member or members of an association to request in a record that identifies an unlawful restriction to remove that restriction and requires the association to act on that request no later than 90 days after receipt of the request. A submitted or approved amendment must identify the owner of the property in question, the property affected, and the document containing the unlawful restriction. Defines the specific wording and form of an amendment request that must be included in the amendment and requires it conform to required formats and wording for the Land Record office. Requires the Recorder to add the amendment to the index and cross reference the amendment to the document containing the unlawful restriction. Requires a court to consider the promotion of uniformity of the law when applying and construing this Act. Lists federal laws or acts the Act modifies, limits, or supersedes and what federal laws or acts it does not. Provides a severability clause. Entitles the bill as the “Uniform Unlawful Restrictions in Land Act.” Amends ARS Title 33, Chapter 4, by adding Article 7 

SB1431 (Right to redeem; foreclosure; sale) [Chapter 176]
Allows enforcement of a judgment within ten years after entry of the judgment and lists rules. Allows a real property tax lien to be fully redeemed after three years but before the sale of the property for excess proceeds and provides for a partial payment refund. Lists actions regarding a judgment foreclosing the right to redeem and outlines the effects of court findings. Lists considerations for determining whether a sale of property for excess proceeds is reasonable. Preserves easements, liens, and interest in excess proceeds from the sale when there is a foreclosure of the right to redeem. Requires notice by listed means and provides remedies for errors and omissions. Requires sale by public auction and outlines rules of the auction and distribution of proceeds, including payment of current taxes due. Provides that an errors and omissions clause applies to claims made by title insurers. Adds “other property tax liens” to distribution of proceeds list. Amends ARS Sections 12-1551, 42-18152, 42-18202, 42-18204, 42-18205 and 42-18206; Amends Title 42, Chapter 18, by adding Article 6 

HB2110 (Mechanic's liens; notice) [Chapter 89]
Stipulates that a notice to a property owner involving a mechanic’s lien that is otherwise compliant is not defective because bold-faced type or the type size required was not used as prescribed in this law. Contains an Emergency Clause. Amends ARS Sections 33-992.01 

HB2119 (Homeowner's associations; fees; related parties) [Chapter 131]
Prohibits an Association from charging certain fees as outlined in state law and those exempted in this legislation, excepting fees for the administration of Association records authorized in a managing agent contract with the Association. Amends ARS Sections 33-442 

SB1270 (Reciprocal deposits; escrow agents; definitions) [Chapter 4]
Authorizes an escrow agent (agent) to use a system of “reciprocal deposits” (defined) to provide additional insurance with the Federal Deposit Insurance Corporation (FDIC) for funds held by the agent and designated for deposit in a qualifying financial institution. Allows an agent to use a system of reciprocal deposits to provide additional insurance with the FDIC for monies held by the agent if the eligible depository arranges for the deposit of the funds in one or more federally insured banks, savings banks, or savings and loan associations for the agent’s account; and receives an amount of federally insured deposits from customers of other financial institutions equal to or greater than the amount of funds initially deposited by the agent. Amends ARS Sections 6-834

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