To:     Arizona REALTORS^®

From: Duane Fouts, 2011 AAR President

Re:      NAR REALTOR Party Political Survival Initiative – Possible $40 NAR Dues Increase

The National Association of REALTORS® is proposing a new initiative – The Realtor® Party Political Survival Initiative. Have you heard the buzz???  This May, the NAR Board of Directors will vote on the proposal at the Midyear Legislative Meetings and Trade Expo.   The NAR initiative is designed to keep the Voice of Real Estate one of the most influential advocacy groups in America. Please take the time to visit the links below and educate yourself on the initiative.  To fund the effort, the REALTOR^® Party Political Survival Initiative proposes a dedicated dues increase of $40 for REALTOR^® Members.

To help provide you with the latest information and answer questions that have been raised, the 2011 NAR Leadership Team and 2003 NAR President, Cathy Whatley have announced that a live virtual Town Hall will be held on Wednesday, April 13th, from 11:00 a.m. to 12:30 p.m. Arizona time. This will be an open discussion on the merits of this initiative to the membership.

To participate, register by clicking here.  Here are more important links:

• PowerPoint Presentation on RPPSI
• Learn more and provide feedback
• FAQs.
• More important background materials – resource page.

Please take a moment to register for the town hall and participate on April 13 at 11am.  Thank you!

Then things changed.

At the annual NAR Convention in San Diego in 2009, I attended the federal issues update session.

I heard firsthand the reports on efforts from a very talented team of individuals in the Government Affairs Division at NAR, led by Jerry Giovaniello, Senior VP of Government Affairs. I listened to presentation after presentation by Jerry’s team of senior lobbyists and heard the details of how they work for us REALTORS® every day on Capitol Hill with our lawmakers to keep REALTOR®  issues and private property rights at the forefront of the conversations in the highest levels of our government.

I have also since then witnessed first hand the extensive statewide efforts led by our own Arizona Association of REALTORS® and CEO Tom Farley and his team. Tom and AAR do a tremendous job working on a daily basis at the state level presenting our priorities and our concerns to our state lawmakers and representing what is best for private property owners in Arizona.

I also noticed, at each state or national conference I attended, the passion and drive with which our leadership and many fellow REALTORS® spoke about the importance of RAPAC. I figured these talented and successful individuals must know something I don’t.

These experiences, which have been continually reinforced over the past two years at the national, state and local levels, have allowed me to make the connection between:

The current issues our RAPAC dollars go towards are critical, such as defending the mortgage interest deduction (MID), short sale and foreclosure lender reform, opposing professional service taxes, Arizona Corporation Commission line extension issues, limitation of HOA transfer fees and many more. (See the links below for more details.) This list is a fast-moving target, requiring the dedication of skilled individuals at state and national levels to track it and ensure we, the REALTOR®, are always represented.

These issues directly affect our business and livelihood, and we can directly affect the outcome of these issues by contributing to RAPAC.

That is the connection.

I look at it this way: We all invest in our business. Each year, around this time, we do a business plan–where to budget dollars for education, technology, marketing, support, dues, travel, phone, computer, supplies and so on.

Add RAPAC to your budget.

There can be no better investment you can make in your business than making a contribution to RAPAC.  It will not only go to protect and sustain your business but to grow your business as well.

SO PLEASE:

• Make that connection.
• Support your career.
• Support your business.
• Support your industry.

Respectfully yours,

– Ed

Important Links:

• Arizona RAPAC Site:  http://www.aaronline.com/rapac
• National RPAC: http://www.realtor.org/government_affairs/rpac
• REALTOR® Party: http://www.realtoractioncenter.com/

The Federal Trade Commission (FTC) issued a rule on Mortgage Assistance Relief Services (MARS), which has generated numerous questions.  A plain reading of the rule seems to sweep real estate professionals involved in short sale transactions under the MARS requirements, which include specific disclosures and a prohibition of up-front fees.  However, a footnote in the FTC’s rule commentary states:

126 As a general matter, the Final Rule is not intended to apply to the marketing of services to assist consumers in selling their properties to third parties. The Final Rule, however, does specifically cover the marketing of services involving the sale of properties to third parties if those services are designed or intended to assist consumers in averting foreclosure, e.g., through a short sale or deed-in-lieu of foreclosure. One commenter urged the Commission to exempt licensed real estate professionals from the Final Rule. NAR at 1–2. The commenter argued the Rule would restrict real estate agents in helping consumers with the process of selling their homes through short sales. Id. The Commission concludes that an exemption for real estate agents is not necessary. Real estate agents customarily assist consumers in selling or buying homes and perform functions such as listing homes for sale, showing homes, and finding desirable homes for consumers. The Commission is aware that real estate agents may perform these functions when properties are bought or sold through a short sale transaction, but does not consider these services to be MARS.

AAR sent a request to NAR legal counsel, which was forwarded to the NAR DC regulatory staff, that the issue be further clarified.  Here is a link to the MARS information on NAR’s website.

Photo by AAR Intern Peter Wilson

The recent tragedy in Tucson was on everyone’s mind as we huddled closer to the warmers for REALTOR® Day at the Capitol last Tuesday. The session began with AAR President Duane Fouts leading us in a moment of silence. Many of the REALTORS® had gotten up before the sun and traveled for hours to attend. The bus to bring the Prescott association members had to be unfrozen with a blow torch before it would open. The REALTOR® Party was well represented as the Arizona legislature focused on REALTOR® issues.

AAR CEO Tom Farley and Government Affairs Director Nicole LaSlavic ensured that we were well prepared by giving a run-down of four hot bills affecting our industry. Everyone under the tent, Republicans and Democrats, was now on the same page. 400 REALTORS® united makes quite an impact. Imagine if it were 1,000?

We enjoyed a nice hot lunch provided by AAR, and my district (District 2) was fortunate to have both Representative Tom Chabin and Senator Jack Jackson, Jr. join us. We were afforded the opportunity to discuss REALTOR® party issues at length with these two representatives. As I looked around, I soon realized that we were not unique. Each table was filled with AAR members addressing Arizona leadership from every legislative district across the state. Members of the Arizona House and Senate took the time to sit, eat and meet with their REALTOR® constituents.

It was my first time attending REALTOR® Day at the Capitol, and it will not be my last. We underestimate ourselves when we do not realize that as the largest trade organization in Arizona, we have an extremely strong voice in shaping public policy. We only need to show up and be recognized. A sincere thank you to everyone from all over the state, AAR members and elected officials alike, for braving the cold, overcoming a tragedy and showing up last week.

Photo courtesy of Flickr user dok1

The Arizona Association of REALTORS® (AAR) has received some inquiries on a piece of state legislation that went into effect July 29, 2010 and its possible impacts on certain real estate transactions that have a well. We have also received some questions as to why the Arizona Department of Water Resources (ADRW) went the route of raising its fees or charging new ones. In short, the ADWR was one of many agencies that have experienced the effect of budget cutting at the Arizona State Legislature due to our state’s serious deficits. When you are dealing with a $3 billion plus deficit, there are going to be casualties.

ADWR’s budget has been cut from $21 million to $7 million and their staff has been reduced from a high of 236 to 95 full-time employees. In order for the ADWR to carry on some semblance of its regulatory responsibilities, SB 1359 was passed to help fund the agency in meeting its regulatory responsibilities. SB 1359 is expected to produce less than $2 million dollars annually as revenue to the agency.

The FAQ below was provided by our “Water Counsel” Sheryl Sweeney, Esq. with the law firm Ryley, Carlock and Applewhite in Phoenix. It should help answer some of the questions AAR has been receiving. We hope you will find this information useful in assisting your clients with their transactions.

ADWR Fixed Fee Schedule FAQ

1. QUESTION: ADWR’s fixed fee schedule refers to “well assignment” and sets the fee for such assignment at $120 per well (previously $10). Is a well assignment the same as the Statement of Change of Well Ownership addressed in Section 3 on DWR Form 55-71A (7/20/07)?

ANSWER: Yes. A well assignment and a Statement of Change of Well Ownership is the same thing for purposes of the fixed fee schedule.

2. QUESTION: The fixed fee schedule refers to a “statement of claim for a water right.” Does this refer to the Statement of Claimant form?

ANSWER: No. A statement of claim is a claim for a pre-1919 surface water right. A Statement of Claimant is a form filed in the general water adjudications.

3. QUESTION: The fixed fee schedule refers to “Assignment of Application, Permit, Certificate or Statement of Claim” and sets the rate for such assignments at $500. Does this include an assignment of the adjudication Statement of Claimant form?

ANSWER: No. The fee schedule does not change the fees associated with filing or assigning a Statement of Claimant.

4. QUESTION: An owner who files the original statement of claim for a water right pays a fee of $5. Yet when a change of ownership occurs and buyer and seller attempt to file an assignment of this claim, a $500 fee is charged. Why?

ANSWER: We do not know.

5. QUESTION: For a typical sale of real property, what ADWR fees do I need to keep in mind?

Please note that ADWR has not yet updated its forms to reflect the new fees but will still require the new fees to be paid.

© Copyright 2010 Jupiter Images

New Arizona laws that affect real estate will go into effect on July 29.  Many of the bills briefly summarized below are the result of meetings with REALTORS® across the state asking the Arizona Association of REALTORS® (AAR) for assistance on a great diversity of issues.  Those issues range from problems with homeowner associations and municipal water providers to new threats to homeowners’ equity by an out-of-state company using CC&Rs to collect private transfer fees.  AAR’s 2010 legislative effort was successful on these issues and more.

We are successful because we have volunteer members who give of their time and real-world experience to become part of our legislative committee reviewing several hundred bills every year introduced at the Arizona Legislature.  Success is boosted by the contributions made by REALTORS® to the REALTORS® of Arizona Political Action Committee (RAPAC), whose contributions support legislative candidates who protect private property rights and oppose candidates who want to ‘double tax’ small businesses through a professional service tax.  The final ingredient to our legislative success is our legislative advocates on staff here at AAR.

To assist your success in real estate, stay abreast of new laws and ordinances impacting your business by visiting your local, state and national REALTOR® association websites for information.  The bills summarized below can be viewed in greater detail at www.azleg.gov. Type the bill number in the upper right corner, and the site will bring up different versions of the legislation as it made its way through the process, You can also see voting records of your lawmakers.  Thanks for taking the time to read the legislation below so that you can be in the know.

2010 AAR Legislative Issues

HB2345: HOA; Condos; For Sale Signs – Homeowner and condo associations are prohibited from banning the display of temporary open house signs, except in common areas. Furthermore, they’re prohibited from regulating a property owner’s “for sale” signs that conform to the industry standards and are owned or used by the seller or the seller’s agent, nor can they require a particular sign.  Further, they may not regulate open house hours except for restricting the hours to after 8 a.m. or before 6 p.m. Nor can they prohibit display of “for lease” signs unless the association does not allow leasing of units.

HB2371: Home Inspections – Swimming pools and spas are included in the list of items that a certified home inspector is to examine during a home inspection.

HB2450: Water and Wastewater Fees and Charges – Prohibits a municipality from refusing service or requiring payment for unpaid water and wastewater services from anyone other than the person contracted with the municipality.

HB2766: Tenant Notice; Foreclosures – If the landlord of a residential property of not more than four connected units that is under foreclosure leases a unit, the landlord must provide each tenant with written notice of possible foreclosure. Form of the notice is prescribed and includes, if known, the date, time and place of the foreclosure sale. If a landlord fails to comply with the notice requirement, the tenant may deliver a notice of breach of agreement and recover damages and obtain injunctive relief.

HB2768: Real Property Transfer Fee Covenants – Prohibits private transfer fees paid to developers or third-party companies on the sale of real property.  This legislation targets a specific and new type of transfer fee, not those paid homeowner associations. Government-imposed transfer fees are already prohibited by the 2008 constitutional amendment drafted by AAR and passed by the voters.

SB1219: Real Estate Licensee - Conforms the time a real estate license is valid to the time period for completing education requirements (two years).  It allows a licensee to cancel his/her licensee, defines business broker and requires a valid fingerprint clearance card before applying for a license.

Photo courtesy of Flickr user Steady Decline

Remember when NAR busted the energy bill rumor about retrofits for existing homes? Now there’s a new email making the rounds about a real estate sales tax in the new health care bill. Turns out, this one is false too.

Get the facts:

“Contrary to reports and newspaper articles circulating widely on the Internet, there is not a 4.0% ‘sales tax’ or ‘transfer tax’ on the sale of a home included in the recently signed health care reform bill. The analysis underlying these reports is incorrect and fails to take into account the interplay of the bill’s provisions with already existing real estate tax laws that remain unchanged.

What was included in the health bill is a provision that imposes a new 3.8% Medicare tax for some high income households that have ‘net investment income.’ Any revenue collected by the tax is dedicated to the Medicare hospital insurance program. This new tax will only apply to households with Adjusted Gross Income (AGI) of more than $200,000 for individuals or more than $250,000 for married couples. Since capital gains are included in the definition of net investment income, an additional tax obligation might result from the sale of real property.

In the case of the sale of a principal residence, the existing $250,000/$500,000 exclusion from capital gains on the sale of a principal residence remains unchanged. Consequently, even when the AGI limits are met, the new tax would not be applied to all capital gains that result from the sale of a home. Rather, it would only apply to any home sale gain realized in excess of the $250K/$500K existing primary home exclusion that pushes the filer’s AGI over the $200K/$250K adjusted gross income limit.

The new Medicare tax will not take effect until January 1, 2013.”

In case you’re curious, Snopes covered this one too. If you get an email and you’re not sure about the facts, do your friends a favor and check it out on Snopes before hitting forward.

Have other health care-related questions? NAR has put together a page on the new health reform law.

Before Email - Picture from Flickr User National Library NZ

Below is an update from the National Association of REALTORS® about HR 2454 (“American Clean Energy & Security Act” also referred to as the “cap and trade” bill). The bad news: Some emails are circulating inaccurate information about the bill. The good news: REALTORS®, including members from Arizona, lobbied Congress, explained that it would be prohibitively expensive to retrofit older homes/buildings and got the provisions for energy retrofitting removed. Here’s the scoop:

NAR Washington Report:  Facts about “Homeowners–Listen Up” Email

An email (subject: “Homeowners–Listen Up”) is being re-circulated claiming that H.R. 2454: the American Clean Energy & Security Act would require an energy license/retrofits for home sale.  The email is NOT accurate.  H.R. 2454 remains pending in the Senate. Senators Kerry (D-MA), Graham (R-SC) and Lieberman (I-CT) continue to pursue bipartisan support for an alternative to the House bill to move the legislation forward for consideration by the Senate.  NAR continues to monitor the Senate efforts and will work to ensure residential and commercial real estate is not adversely impacted.

Additionally, during consideration of H.R. 2454, NAR was instrumental in eliminating time-of-sale energy efficiency requirements from the bill.  The House approved H.R.2454 with the following two provisions.  We will work to ensure that these provisions are retained in the Senate version of the legislation:
* Section 202 (Building Retrofit Program) would offer matching grants for home improvements.  State governments would administer the program which is voluntary and available to all property owners.
* Section 204 (Building Energy Performance Labeling Program) would apply to new construction only and prohibit time-of-sale labeling.  The original energy audit and MLS listing provisions were deleted.

Thanks to REALTORS®, NAR succeeded in excluding existing real estate from the bill requirements.  Last summer after the House approved its version of the legislation and this email originally surfaced, NAR developed a full packet of information complete with legislative analysis, Myths vs. Facts, FAQs, etc.  Below is a link to the packet on Realtor.org. http://www.realtor.org/government_affairs/gapublic/american_clean_energy_security_act

Sam Whitfield
National Association of REALTORS
500 New Jersey Ave. NW
Washington, DC 20001
202/383-1131 (direct)

The rumor even got debunked on the rumor-busting website Snopes.com.

One of the important benefits of membership in the Arizona Association of REALTORS® (AAR) is the legislative efforts on behalf of homeowners. Want to see what those efforts look like first hand? Here’s your chance.

In this video, the Arizona State Senate’s Committee on Commerce and Economic Development discusses HB 2768 (“real property transfer fee convenants”) starting at 28:20. AAR CEO Tom Farley shares the association’s position on the legislation and has a lively exchange with committee members from 34:18 – 01:07:45. (Move the blue slider to advance to that section of the video below.) 

Watch your association—and your state government—in action!

(You can also view the video on the state legislature’s site.)

Learn more about private transfer fees with these resources:

Washington Post: “A New Real Estate Cost to Watch for: Developer’s Private Transfer Fee”

REALTOR® Magazine’s Speaking of Real Estate Blog: “Help for Battling Private Transfer Fees”

 NAR: “Private Transfer Fees—Potential for Trouble, Problems for the Future?” May 2008 (46-page PDF)