Key Takeaways
- ADRE can investigate complaints, conduct audits, and impose discipline
- Violations include misrepresentation, trust account issues, failure to supervise, and unlicensed activity
- Disciplinary actions range from letters of concern to license revocation
- Licensees can request hearings through the Office of Administrative Hearings
- The Recovery Fund can compensate victims of licensee misconduct up to statutory limits
Last updated: January 2026
Arizona License Law Violations and Discipline
ADRE has authority to investigate and discipline licensees for violations of Arizona real estate law.
Types of Violations
Common Violations
| Category | Examples |
|---|---|
| Misrepresentation | False statements about property |
| Trust Account | Commingling, conversion, failure to deposit |
| Supervision | Inadequate oversight by broker |
| Disclosure | Failure to disclose material facts |
| Unlicensed Activity | Practicing without valid license |
| Fraud | Dishonest dealings |
| Incompetence | Failure to act with reasonable skill |
Specific Prohibited Acts
A.R.S. 32-2153 lists grounds for discipline including:
- Obtaining license by fraud or misrepresentation
- Conviction of felony or crime involving moral turpitude
- Making false promises or misrepresentations
- Acting for both parties without knowledge and consent
- Commingling trust funds
- Failure to provide copies of documents
- Failure to supervise salespersons
- Demonstrating unworthiness or incompetence
- Violating fair housing laws
- Violating ADRE rules
Disciplinary Process
Investigation
ADRE initiates investigations based on:
- Consumer complaints
- Routine audits
- Referrals from other agencies
- Self-reporting
Hearing Rights
Licensees facing discipline have rights to:
- Written notice of allegations
- Hearing before Administrative Law Judge
- Present evidence and testimony
- Legal representation
- Appeal decisions
Disciplinary Actions
Types of Discipline
| Action | Description |
|---|---|
| Letter of Concern | Warning, no formal discipline |
| Consent Agreement | Negotiated settlement |
| Probation | License conditions |
| Suspension | Temporary loss of license |
| Revocation | Permanent loss of license |
| Denial | Refusal to issue license |
| Civil Penalty | Fine |
Common Penalties
| Violation | Typical Action |
|---|---|
| First minor offense | Letter of concern or consent agreement |
| Trust account violation | Suspension or revocation |
| Fraud/misrepresentation | Revocation |
| Failure to disclose | Suspension, education |
| Unlicensed activity | Injunction, civil penalty |
Recovery Fund
The Real Estate Recovery Fund compensates victims of licensee misconduct:
| Feature | Detail |
|---|---|
| Maximum per transaction | $30,000 |
| Maximum per licensee | $90,000 |
| Source | Licensee fees |
| Requirement | Judgment against licensee |
Consequences of Fund Payment
If the Recovery Fund pays a claim:
- Licensee must repay the fund
- License is suspended until repayment
- Plus interest and costs
Avoiding Violations
Best practices:
- Know the law - Stay current on requirements
- Document everything - Keep complete records
- Disclose fully - When in doubt, disclose
- Handle funds properly - Follow trust account rules
- Supervise carefully - Brokers must oversee salespersons
- Stay educated - Complete CE requirements
Loading diagram...
Test Your Knowledge
What is the maximum Recovery Fund payment per licensee in Arizona?
A
B
C
D
Test Your Knowledge
What happens to an Arizona licensee's license if the Recovery Fund pays a claim?
A
B
C
D