What is the Arizona Real Estate Recovery Fund?

  1. Real Estate
  2. What is the Arizona Real Estate Recovery Fund?
real estate recovery fund
Real Estate

The Arizona Real Estate Recovery Fund (“the Recovery Fund”) is a compensation fund that the state established to benefit any person aggrieved by any act, representation, transaction, or conduct of a licensed real estate or cemetery broker or salesperson that violates state real estate law. The Arizona Real Estate Commissioner administers the fund, which is funded by license surcharge fees.

You can rely on a real estate lawyer from Provident Law® to assist you in recovering payment on judgments resulting from a real estate dispute. If applicable, your attorney also can help you file a claim with the Recovery Fund.

Losses the Real Estate Recovery Fund May Compensate

The Recovery Fund is a fund of last resort for individuals to recover certain losses, including the following:

  • Actual and direct out-of-pocket loss to the aggrieved person in a real estate or cemetery plot transaction, as directly caused by the actions of an Arizona licensed real estate salesperson/broker as stipulated in the judgment.
  • Reasonable attorney fees and other costs as stipulated in the judgment.

Some examples of permissible losses that the Recovery Fund might provide compensation for include:

  • Misappropriated earnest money deposits or down payments on the purchase of houses;
  • Misappropriated security deposits, rental income, or money intended for mortgage payments or other expenses managed by a licensee;
  • Repair costs related to defects in the condition of a property that a licensee materially misrepresented; and
  • Transactional losses incurred when a licensee has actively misrepresented the financial conditions of the property and parties involved.

However, other types of losses from real estate transactions are not compensable through the Recovery Fund. Some of these losses include the following:

  • Lost profits from a real estate transaction;
  • Transactions concerning a property outside Arizona;
  • Loans, notes, limited partnerships, or other securities, even if caused by an investment in or secured by real estate;
  • Repair costs concerning defects that were disclosed to the purchaser;
  • Losses due to vandalism or natural causes;
  • Punitive damages;
  • Post-judgment interest; and
  • Undocumented real estate transactions or losses.

Other Restrictions on Compensation from the Real Estate Recovery Fund

An individual must file an action for a judgment for payment from the Recovery Fund no later than five years from the actual cause of action. Furthermore, the liability of the Recovery Fund shall not exceed $30,000 per transaction, no matter how many people suffered losses, or $90,000 per licensee.

Getting Compensation from the Real Estate Recovery Fund

First, with the help of your real estate lawyer, you must obtain and record a criminal or civil judgment against all parties involved in the real estate transaction, including the licensed real estate agent and their employing broker. Once you obtain the judgment, you must provide an original, certified, recorded copy to the Arizona Department of Real Estate (ADRE) and the Recovery Fund Application (Form RF-107).

To get compensation from the Recovery Fund, you must have exhausted all efforts to collect the money you have been awarded in the judgment from all liable parties. You must provide written documentation of those efforts to the ADRE.

You also must complete Form RF-109 to notify the licensee(s) that you have or will file a claim against them with the Recovery Fund. You must provide proof of service to the licensee via personal service (Form RF-110), certified mail (Form RF-111), or publication (Form RF-112).

Finally, you must obtain a writ of garnishment or execution against the licensee from the court and provide documentation of the writ to the court. You also must provide any other documentation requested to support your application.

Call Us Today with Your Arizona Real Estate Recovery Fund Questions

We aim to help you handle your real estate legal matters, including claims under the Recovery Fund. We will advocate on your behalf throughout your real estate transaction and any disputes that arise from it. Contact the offices of Provident Law® today at (480) 388-3343 or online and schedule an appointment to speak with an Arizona real estate lawyer about your legal matter.

Previous Post
Seeking a Variance Under Arizona Law
Next Post
How the National Association of Realtor Settlement Will Affect Real Estate Commission Practices
Menu