Attorney General Mayes Successfully Advances Legislation to Protect Homeowners from Predatory Agreements

PHOENIX-Arizona Attorney General Kris Mayes recently helped advance legislation to protect Arizona homeowners from unfair, deceptive, and predatory exclusive property engagement agreements that lock homeowners into future broker and agent listing agreements for excessive time periods, cloud homeowners' title, and make it difficult for homeowners to sell their homes or tap into their equity.

As a result of Attorney General Mayes' efforts, on April 2, 2024, Governor Hobbs signed SB 1218 into law. SB 1218 makes certain predatory real estate listing agreements unenforceable and nullifies those already recorded in property records.

"This new law is a response to recent examples of egregious and deceptive practices in the real estate industry, which underscored the need for stronger laws to protect homeowners," said Attorney General Mayes. "This legislation will help Arizonans protect their largest financial investment-their homes-and will create a more transparent and accountable real estate industry. Thank you to Arizona Department of Real Estate Commissioner Susan Nicolson for her partnership and leadership on this important bill."

SB 1218 defines exclusive property agreements as a contract or agreement that provides an exclusive right to a person to list or sell residential real estate. The new law prohibits exclusive property agreements from:

• lasting longer than twelve months,
• purporting to run with the land,
• being recorded in the county recorder's office,
• creating a lien or security interest on homeowners' property,
• binding future owners of interest except in specific circumstances, and
• allowing for the assignment of the agreement without homeowners' clear consent.

The new law prohibits courts from enforcing exclusive property agreements that violate the proscribed requirements of the law. It also requires the Arizona Department of Real Estate to execute and record documents in each county recorder's office that disclaim the validity and enforceability of any contract or agreement that violates this law. The law subjects any person who violates the proscribed requirements to liability and penalties.

Senior Litigation Counsel Alyse Meislik and Assistant Attorney General Amanda Salvione assisted with the drafting of this legislation. A copy of the legislation is available here.

If you believe you have been the victim of consumer fraud, you can file a consumer complaint by visiting the www.azag.gov/consumer. If you need a complaint form sent to you, contact the Attorney General's Office in Phoenix at (602) 542-5763, in Tucson at (520) 628-6648, or outside the Phoenix and Tucson metro areas at (800) 352-8431.

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