Amending Arizona’s Constitution

The dream of homeownership is one that is deeply ingrained in the American spirit.

Our nation is founded on a set of ideals that include the opportunity for prosperity, success, and upward social mobility achieved through hard work. But imagine if the government-imposed rules and regulations that would hinder your ability to earn a living, or worse made it too expensive for individuals to realize the American Dream of Homeownership.

Unfortunately, these threats all too real, and as a result your state association had to pass three Constitutional Amendments to protect our industry and your clients.

Click to see the REALTORS® Amend Arizona’s Constitution Timeline

As an Arizona REALTOR®, you are constitutionally authorized to engage in the limited practice of law by drafting the purchase contract and other documents incident to the transfer of real property.

It would be hard to imagine conducting your business without this ability, but on November 1, 1961, the Arizona State Supreme Court handed down a decision whereby real estate brokers and title companies could not continue serving the public by filling in forms. Instead, these firms and their customers were required to refer such matters to attorneys.

Further, the Court also stated that the Legislature had no power to authorize real estate licensees to practice law by drafting purchase contracts because the unauthorized practice of law is governed by the court, not by the legislature. These decisions would have forced your clients to hire a lawyer to prepare deeds, mortgages, leases, and assignments, all resulting in increased costs to the transaction.

Proposition 103 – Fighting for REALTOR® Rights to Draft Purchase Contracts

As a result, the Arizona REALTORS® directors decided to circulate initiative petitions to put Proposition 103 – Arizona Rights of Real Estate Brokers and Salesmen Amendment on the ballot to amend the state constitution and allow real estate licensees to draft purchase contracts.

Despite vigorous opposition by the State Bar, 78.59 percent or 236,856 individuals voted to adopt Article 26 – Right of Licensed Real Estate Brokers and Salesmen to Prepare Instruments Incident to Property Transactions as an amendment to the Arizona Constitution in the November 6, 1962 election.

Fast forward to the idea of a Real Estate Transfer Tax. A real estate transfer tax is a state and/or local tax, or fee imposed on real property that is typically assessed according to the sales price of real estate property when transferred. Typically, once the tax is initiated, the rate can be increased by the state, county or city to meet future legislative enactments.

Proposition 100 – Prohibiting a Real Estate Transfer Tax

Recognizing this form of taxation is double taxation, results in a loss of equity, further increases the cost of selling a home, negatively impacts lower income individuals and punishes homeowners who may want to move. In 2007, the Arizona REALTOR® board of directors passed a motion to move forward with a ballot proposition to prohibit the state and local governments from enacting a real estate transfer tax.

On June 24, 2008, the Arizona REALTORS® submitted 372,000 signatures to the Arizona Secretary of State to officially be placed on the ballot, for what became known as Proposition 100 – Protect Our Homes Act.

The only group to oppose Proposition 100 was the Arizona Education Association. The AEA stated that Proposition 100 was “an attempt to tie the hands of Arizona’s elected officials as they determine the best way to grow Arizona into the future.” Despite opposition, the Arizona REALTORS® were once again victorious in their efforts with 1,645,119 individuals or 76.8 percent voting in favor.

It was only a few years after the passage of Proposition 100, that legislators were once again looking at the real estate industry and your client’s pocketbooks to fund their overspending — this time through the implementation of a taxation on services. The Arizona REALTORS® recognized this threat and in 2017 began the process to propose a constitutional amendment to prohibit service taxes from ever being established in Arizona.

Proposition 126 – Prohibiting Future Service Taxes

With petitions in hand, REALTORS® went into their local communities to gather support. Collectively, more than 400,000 signatures were submitted to the Secretary of State’s office and the measure was officially deemed Proposition 126 – The Prohibit New or Increased Taxes on Services Initiative.

The language as drafted by the Arizona REALTORS® prohibits the state and local governments from enacting any new or increased tax on services that were not already in effect on December 31, 2017.

Along the way, Proposition 126 faced opposition and misinformation from several sources, but the Arizona REALTORS® persevered. On November 6, 2018, 64.09 percent or 1,436,106 individuals voted in favor of The Protect Arizona Tax Payers Act.

As a REALTOR®, you are a member of a 50,000 plus strong state association. The Arizona REALTORS® has long recognized the integral role you play in an individual’s dream to be a homeowner. When the government establishes roadblocks that would stifle your ability to conduct your business and place the dream of homeownership out of reach for many, we are there to protect you, the industry and the American Dream.

Related resources:
AAR and Article 26 of the Arizona Constitution (March 16, 2006)
Arguments for 2008 Arizona Proposition 100 (Oct. 3, 2008)
Protect Arizona Taxpayers Act Files Record Number of Signatures (July 9, 2018)

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