Arizona Real Estate Advertising Laws
The Arizona Department of Real Estate (ADRE) regulates the manner in which developers, salespersons and brokers offer real estate for sale in Arizona. Those regulations are contained in Title 32 of the Arizona Revised Statutes and in rules promulgated by ADRE. Most of the rules prohibit various practices that could mislead buyers about the condition of the property. Some of the regulations relate only to the participation of a licensed salesperson in a sale.
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Real Estate Licensee Disclosures
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Real estate agents in Arizona cannot use any advertising that fails to disclose that an agent is involved in the sale. All advertisements must clearly and prominently disclose the legal name or trade name on file with ADRE for the real estate brokerage that employs the agent. When advertising property listed for sale with a different broker, the listing broker must be identified. Agents selling their own property must include the words "owner/agent" to disclose their status as a licensed salesperson or broker.
Many real estate companies operate as franchises of a national brand. They use the franchisor's trade name in their business. Signs displayed at a franchisee's office must list the broker's name as shown on the ADRE license and a legend stating that each franchised office is independently owned and operated.
No Misleading Advertisements
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Arizona Revised Statutes Sections 32-2161 and 32-2183.01 and ADRE's rules prohibit false or misleading advertising. The statutes and rules prohibit false or misleading advertisements in general and also define special rules for specific types of marketing content.
Except for unmodified photographs of the property, pictures or illustrations require a prominent disclosure of the nature of the depiction (e.g., "artist's rendering") and any proposed improvements that don't yet exist. Pictures that are not an actual or accurate representation of the property advertised must prominently identify the distance of the pictorial representation from the property.
A developer cannot state or imply that buyers will have exclusive use of a facility if the facility is open to the public. Descriptions of private clubs available for use must state that such use is at at the pleasure of the facility's owners unless purchasers will receive an ownership interest in the club as part of the property purchase.
Descriptions of lakes or streams must include the average surface area of lakes and whether a lake or stream is permanent or fluctuates substantially.
Any advertised price, monthly payment or interest rate must be available to all buyers unless the advertisement conspicuously discloses any restriction or lack of availability.
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Future Improvements
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Developers often start marketing a property before construction is complete. Such marketing might include descriptions of proposed or incomplete improvements. ADRE allows this if the advertising discloses the estimated completion date and the developer has given ADRE satisfactory assurances that the improvements will be completed within the time advertised.
Conditional Sales and Lot Reservations
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Unless an exemption applies, developers must obtain ADRE approval of a detailed disclosure document in order to sell property in a subdivision (generally, projects with six or more units). The disclosure document is known as a public report. One commonly used exemption allows the developer to enter into sales contracts that are conditioned upon ADRE approving the public report. Another exemption allows developers to accept lot reservations that the buyer will have an opportunity to cancel before signing a purchase agreement. In both cases, all advertising must disclose that only lot reservations or conditional sales contracts, as applicable, until ADRE approves the public report.
Promotional Activities
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Developers must apply to ADRE for permission to conduct a drawing, lottery or contest. Any applicant must have a current public report in effect. The application must provide all information required by ADRE, including information about the developer and its broker, the public report number and details of the proposed promotion. Additional requirements apply to timeshare companies that offer rewards for attending a timeshare presentation or tour.
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References
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