Illegal Subdivisons in Arizona - Real Estate Agents Warned

I find this information on illegal subdivisions very valuable to any Arizona land investor or Arizona land owner. Also if you are a Realtor or real estate agent in the State of Arizona in Phoenix, Scottsdale, Maricopa, Show Low, Concho, Pinetop, Snowflake, or Tucson you need to read this information. A.R.S.§32-2165(B) designates illegal subdividing as a class 5 Felony. I just talked with a White Mountains real estate agent up in Show Low that didn't want to go to jail or prison. These real estate agents are very scared.

This was written by Bill Day and published in the State of Arizona Department of Real Estate Bulletins.

You can request an investigation with the State of Arizona Department of Real Estate. The Department is authorized to investigate and take action when someone violates real estate law or the Commissioner’s rules. On the left side bar is an option to request an investigation. You just need to fill out the forms. You can also email the real estate investigations at this email address: investigations@azre.gov

Illegal subdividers, persons assisting them, and real estate agents, beware – when ADRE finds you, we will take action – and do not expect a slap on the hand.
Editor’s Note: Mr. Day is Deputy Director of Investigations, has been with ADRE for 18 years, and is a Certified Fraud Examiner. ��

Illegal Subdividers Beware!

By Bill Day
The new ADRE administration under Commissioner Elaine Richardson has placed a high priority on combating illegal subdividing. The Commissioner has created a special unit within the ADRE’s Investigations Division to deal entirely with illegal subdividing and subdivision violations. In addition, ADRE has been working closely with Counties and other State agencies to detect illegal subdividing, assist in prosecuting illegal developers and bring the properties into compliance with state laws and county ordinances. Illegal subdividers beware–there are many eyes out there looking for you!

In order to determine whether an illegal subdivision has been or is being created, one needs to review the Statutes. The definitions related to subdividing include
A.R.S §32-2101(1), “Acting in Concert”, A.R.S. §32-2101(14), “Common Promotional Plan”, A.R.S. §32-2101(53), “Subdivider”, and A.R.S. §32-2101(54) “Subdivision”. The statutes for violations of subdivision laws A.R.S §32-2181(A)(D) and
A.R.S.§32 2183(F). In addition, A.R.S. §32-2164 specifically relates to licensees. Also, A.R.S.§32-2165(B) designates illegal subdividing as a class 5 Felony.

In A.R.S. §32-2101(16), “Contiguous “ refers to lots, parcels or fractional interests that share a common boundary or point. This relates only to properties that are not located within a subdivision development. Any properties within a subdivision development, whether they share a common boundary or point or not, are automatically deemed to be contiguous. Therefore, if one owns or has interest in more than five parcels anywhere within the development, that person is required to comply with the subdivision laws.

Even if lots or parcels are not contiguous, if they are part of a common promotional plan or parties are determined to be acting in concert, the creation of 6 or more lots or parcels would also require compliance with the subdivision laws pursuant to A.R.S. §32-2181. Acting in concert is the most prevalent method persons use to attempt to avoid the subdivision laws. To determine whether persons are acting in concert, the Department may consider any one or more of the following:
• Familial relationship between parties.
• Business relationship between parties to buy, sell
and/or divide property.
• Officers, members, managers or directors, or person owning interest in one or more business entities or partnerships, and/or partners in one or more businesses.
• Lot release provisions to enable further divisions.
• Use of same surveyor, same real estate agent, and/ or notary public by multiple parties to the transactions in question.
• Maps, drawings, or surveys of the parcel indicating further division.
• Recorded or unrecorded conditions, covenants and restrictions, or deed restrictions that may indicate development activity.
• The timing of applications for permits for septic tanks, wells or other infrastructure.
• Well-share or road maintenance agreements between or among actual or prospective lot owners.
• The number and placement of easements.
• The manner in which transactions are structured
and/or closed.

Why do persons avoid the subdivision laws? It’s simple – ignorance, money and greed. They may buy a parcel of land and proceed to divide and sell it without fully exploring the related rules and statutes. Or they try to avoid the costs of properly subdividing the property. As a result, the purchasers do not get what they are entitled to. Most purchasers think they are getting a good deal, until something goes wrong, for example, an inadequate water supply, an inadequate water supply for fire suppression, inadequate flood protection, emergency vehicles not being able to get to the residence because of inadequate roads, poor air quality due to dirt roads, roads not up to county standards, and the list goes on. Ultimately either the purchasers have to pay for the improvements or the taxpayers must pay, when the local government is forced to provide the facilities for health and safety reasons. Illegal subdividing hurts everyone.

ADRE’s mission is to protect the public — this responsibility is taken very seriously. Real estate licensees are subject to revocation of their licenses. Illegal subdividers, persons assisting them, and real estate agents, beware – when ADRE finds you, we will take action – and do not expect a slap on the hand.

Editor’s Note: Mr. Day is Deputy Director of Investigations, has been with ADRE for 18 years, and is a Certified Fraud Examiner. ��