(c) An arbitration award that includes findings of fact and conclusions of law, that has been confirmed and reduced to judgment pursuant to § 12-133 and that was rendered according to title 12 and the rules of the American arbitration association or another recognized arbitration body.

2. “Judgment debtor” means any defendant under this article who is the subject of a judgment.

§ 32-2187. Payments to real estate recovery fund

A. In addition to any other fees, payments shall be made to the real estate recovery fund on application by any person, as follows:

1. For an original real estate or cemetery broker's license, twenty dollars.

2. For an original real estate or cemetery salesperson's license, ten dollars.

B. If, on June 30 of any year, the balance remaining in the real estate recovery fund is less than six hundred thousand dollars, every broker when renewing a real estate or cemetery license during the following license year shall pay, in addition to the license renewal fee, a fee of twenty dollars for deposit in the real estate recovery fund, and every salesperson when renewing a real estate or cemetery license during such year shall pay, in addition to the license renewal fee, a fee of ten dollars for deposit in the real estate recovery fund.

§ 32-2188. Statute of limitations; service of summons; application for payment; insufficient monies; definition


A. An action for a judgment that subsequently results in an order for payment from the real estate recovery fund shall not be started later than five years from the accrual of the cause of action.

B. If an aggrieved person commences an action for a judgment that may result in an order for payment from the real estate recovery fund, and the defendant licensee cannot be served process personally in this state, the summons may be served by the alternative methods of service provided for by the Arizona rules of civil procedure, including service by publication. A judgment that complies with the provisions of this section and that was obtained after service by publication only applies to and is enforceable against the real estate recovery fund. The department may intervene in and defend any such action.

C. An aggrieved person may apply to the department for payment from the real estate recovery fund after the aggrieved person obtains a judgment against a real estate or cemetery broker or salesperson based on the licensee's act, representation, transaction or conduct in violation of this chapter or the rules adopted pursuant to this chapter. The claimant must file the original application, including appendices, within two years after the termination of all proceedings, reviews and appeals connected with the judgment. The commissioner, in the commissioner's sole discretion, may waive the two-year application deadline if the commissioner determines that the waiver best serves the public interest. Delivery of the application must be by personal service or by certified mail, return receipt requested.

D. The application must be within the limitations prescribed in § 32-2186 for the amount unpaid on the judgment that represents the claimant's actual and direct loss on the transaction.

E. The department shall prescribe and supply an application form that includes detailed instructions with respect to documentary evidence, pleadings, court rulings, the products of discovery in the underlying litigation and notice requirements to the judgment debtor under § 32-2188.01. The claimant must submit the claim on an application form supplied by the department. The application must include:

1. The claimant's name and address.

2. If the claimant is represented by an attorney, the attorney's name, business address and telephone number.

3. The judgment debtor's name and address or, if unknown, the names and addresses of persons who may know the judgment debtor's present location.

4. A detailed narrative statement of the facts explaining the allegations of the complaint on which the underlying judgment is based, with a copy of the contracts, receipts and other documents from the transaction, the last amended complaint, all existing recorded judgments, documentation of actual and direct out-of-pocket losses and any offsetting payment received and all collection efforts attempted.

5. The identification of the judgment, the amount of the claim and an explanation of its computation, including an itemized list of actual and compensatory damages awarded and claimed.

6. For the purpose of an application that is not based on a criminal restitution order, a statement by the claimant, signed under penalty of perjury, that the complaint on which the underlying judgment is based was prosecuted conscientiously and in good faith. For the purposes of this paragraph, “conscientiously and in good faith” means that all of the following apply:

(a) No party that was potentially liable to the claimant in the underlying transaction was intentionally and without good cause omitted from the complaint.

(b) No party named in the complaint who otherwise reasonably appeared capable of responding in damages was intentionally and without good cause dismissed from the complaint.

(c) The claimant employed no other procedural means contrary to the diligent prosecution of the complaint in order to seek to qualify for the recovery fund.

7. For the purpose of an application that is based on a criminal restitution order, all of the following statements by the claimant, signed under penalty of perjury:

(a) The claimant has not intentionally and without good cause failed to pursue any person potentially liable to the claimant in the underlying transaction other than a defendant who is the subject of a criminal restitution order.

(b) The claimant has not intentionally and without good cause failed to pursue in a civil action for damages all persons potentially liable to the claimant in the underlying transaction who otherwise reasonably appeared capable of responding in damages other than a defendant who is the subject of a criminal restitution order.

(c) The claimant employed no other procedural means contrary to the diligent prosecution of the complaint in order to seek to qualify for the recovery fund.

8. The following statements, signed under penalty of perjury, and information from the claimant:

(a) The claimant is not a spouse of the judgment debtor or a personal representative of the spouse.

(b) The claimant has complied with all of the requirements of this article.

(c) The judgment underlying the claim meets the requirements of this article.

(d) The claimant has recorded a certified copy of the superior court judgment or transcript of judgment pursuant to §§ 33-961 and 33-962 in the county where the judgment was obtained and in the county where all judgment debtors reside and has provided a copy of the recorded judgment to the commissioner.

(e) The claimant has caused the judgment debtor to make discovery under oath, pursuant to § 12-1631, concerning the debtor's property.

(f) The claimant has caused a writ of execution to be issued on the judgment and the officer executing the writ has made a return showing either:

(i) That no personal or real property of the judgment debtor liable to be levied on in satisfaction of the judgment could be found, sold or applied.

(ii) That the amount realized on the sale of the property, or as much of the property that was found, under the execution was insufficient to satisfy the judgment.

(g) The claimant has caused a writ of garnishment to be issued to each known employer of the judgment debtor ascertained by the claimant, that each garnishee-defendant has complied with the respective writ and any judgment or order resulting from the writ and that the amount realized from all judgments against the garnishee-defendants was insufficient to satisfy the balance due on the judgment.

(h) The claimant has deducted the following amounts from the actual or compensatory damages awarded by the court:

(i) Any amount recovered or anticipated from the judgment debtor or debtors.

(ii) Any amount recovered through collection efforts undertaken pursuant to subdivisions (d) through (g) of this paragraph and including an itemized valuation of the assets discovered and amounts applied.

(iii) Any amount recovered or anticipated from bonding, insurance or title companies, including recovery of punitive damages.

(iv) Any amount recovered or anticipated from in-court or out-of-court settlements.

(v) Any amount of tax benefits accrued or taken as deductions on federal, state or local income tax returns.

F. If the claim is based on a judgment against a salesperson or broker and the claimant has not obtained a judgment against the salesperson's or broker's employing broker, if any, or has not diligently pursued the assets of the employing broker, the department shall deny the claim for failure to diligently pursue the assets of all other persons liable to the claimant in the transaction unless the claimant demonstrates, by clear and convincing evidence, that either:

1. The salesperson or broker was not employed by a broker at the time of the transaction.

2. The salesperson's or broker's employing broker would not have been liable to the claimant because the salesperson or broker acted outside the scope of employment in the transaction.

G. The commissioner, at the commissioner's sole discretion, may waive compliance with one or more of the requirements enumerated in subsection e, paragraph 8 or subsection F of this section if the claim is based on an award pursuant to a criminal restitution order or if the commissioner is satisfied that the claimant has taken all reasonable steps to collect the amount of the judgment or the unsatisfied part of the judgment from all judgment debtors but has been unable to collect.

H. If the commissioner finds it is likely that the total remaining liability of the recovery fund is insufficient to pay in full the valid claims of all aggrieved persons who may have claims against any one licensee, the commissioner may petition the court to initiate a proration proceeding. The court shall grant the petition and order a hearing to distribute the total remaining liability of the fund among the applicants in the ratio that their respective claims bear to the aggregate of the valid claims or in such other manner as the court deems equitable. The commissioner or any party may file a proposed plan for equitable distribution of the available monies. The distribution of monies shall be among the persons entitled to share them, without regard to the order of priority in which their respective judgments may have been obtained or their respective applications may have been filed. The court may require all applicants and prospective applicants against one licensee to be joined in one action, to the end that the respective rights of all the applicants to the recovery fund may be equitably adjudicated and settled. The court shall not include in the claims for proration the claim of any person who has not, within ninety days after the court has entered the order for proration, filed a complaint with the court, served the licensee and provided written notice of the claim to the commissioner. The liability of the fund on any application affected by a proration proceeding is based on the limits in effect on the date when the last application for payment is filed. The court may refuse to consider or award prorated recovery to any person who fails to expeditiously prosecute a claim against the licensee or promptly file an application for payment and submit supporting documentation as required by this article.

I. If the commissioner pays from the real estate recovery fund any amount in settlement of an applicant's claim or toward satisfaction of a judgment against a licensed broker, designated broker for a corporation or salesperson, the license of the broker, designated broker for a corporation or salesperson shall be automatically terminated upon the issuance of an order authorizing payment from the real estate recovery fund. A broker, designated broker for a corporation or salesperson is not eligible to receive a new license until the licensee has repaid in full, plus interest at the rate provided by § 44-1201, subsection A, the amount paid from the real estate recovery fund on the licensee's account and has provided evidence to the commissioner that the judgment has been fully satisfied.

J. If, at any time, the money deposited in the real estate recovery fund is insufficient to satisfy any duly authorized claim or portion of a claim, the commissioner shall, when sufficient money has been deposited in the real estate recovery fund, satisfy the unpaid claims or portions of claims, in the order that the claims or portions of claims were originally filed, plus accumulated interest at the rate of four per cent a year.

K. For the purposes of this section, “complaint” means the facts of the transaction on which the judgment is based.

§ 32-2188.01. Notice of claim to judgment debtor; response


A. Within the same time prescribed by § 32-2188, subsection C for applying for payment from the real estate recovery fund, an aggrieved party who applies for payment shall serve notice of the claim on the judgment debtor, together with a copy of the application. The notice shall be in the following form:

Based on a judgment against you in favor of (enter name of claimant), application is being made to the Arizona state real estate department for payment from the real estate recovery fund.

If payment is made from the real estate recovery fund, all licenses and license rights that you have under the Arizona real estate law will be automatically terminated on the date of payment and may only be reinstated pursuant to § 32-2131, subsection A, paragraph 3, Arizona Revised Statutes, on a showing that 1) the real estate recovery fund has been reimbursed for the amount paid plus interest at the current legal rate, 2) the underlying judgment has been fully satisfied and 3) you have filed an original application for a license.

If you wish to contest payment from the real estate recovery fund, you must file a written response to the application. The Arizona state real estate commissioner must receive your response at (address) within 35 calendar days after the date this notice is [mailed, delivered, first published]. You must also send a copy of the response to the claimant. If you fail to respond as required, you waive your right to present your objections to payment.

B. If the judgment debtor holds a current license issued by the department, the notice and copy of the application may be served by certified mail, return receipt requested, addressed to the judgment debtor's latest business or residence address on file with the department. If the judgment debtor does not hold a current license and if personal delivery cannot be effected by exercising reasonable diligence, the claimant must publish the notice once a week for two consecutive weeks in a newspaper of general circulation in the county in which the judgment debtor was last known to reside.

C. If the judgment debtor fails to file a written response to the application with the department within thirty-five calendar days after service under subsection b of this section or after the first publication of the notice, the judgment debtor is not thereafter entitled to notice of any action taken or proposed to be taken by the commissioner with respect to the claim.

§ 32-2188.02. Correction of deficiencies in the application


A. If the commissioner determines that a claimant's application fails to comply substantially with the requirements of § 32-2188 or rules adopted pursuant to this chapter, the commissioner, within thirty calendar days after receiving the application, shall mail an itemized list of deficiencies to the claimant. For the purposes of this subsection, “comply substantially” means filing with the department the documents that are minimally necessary to process a claim, including at least a certified copy of the judgment, legible copies of documents establishing the underlying transaction and amounts of losses suffered and a statement concerning amounts recovered from or on behalf of the judgment debtor.

B. The claimant must respond within sixty calendar days after receiving the list of deficiencies by providing the information identified by the commissioner. If the claimant fails to correct the deficiencies within sixty calendar days, the department shall close the file unless the claimant requests an extension in writing. A claimant whose file has been closed may submit a new application as provided by § 32-2188.

C. The deadline prescribed by § 32-2188.04 for the commissioner to make a decision on the application is suspended from the date the commissioner mails the list of deficiencies to the applicant until the date the department receives the requested information.

§ 32-2188.03. Investigation and discovery


In considering and investigating an application, the department may use all appropriate means of investigation and discovery that are available pursuant to this chapter.

§ 32-2188.04. Final decision and order on claim; notice


A. The commissioner shall make a final written decision and order on a claim within ninety calendar days after receiving a completed application except in the following cases:

1. A proration hearing is pending under§ 32-2188, subsection H.

2. An application is deficient or fails to comply substantially with the requirements of § 32-2188 or rules adopted pursuant to this chapter as determined pursuant to §32-2188.02.

The ninety day time period begins under this subsection when the department receives an application that is substantially complete.

3. The claimant agrees in writing to extend the time for making a decision.

B. If the commissioner fails to render a written decision and order on a claim within ninety calendar days, or within an extended period of time provided under subsection A of this section, the claim is considered to be approved on the day following the final day for rendering the decision.

C. The commissioner may approve or deny an application or may enter into a compromise with the claimant to pay less in settlement than the full amount of the claim. If the claimant refuses to accept a settlement offered by the commissioner, the commissioner shall deny the claim.

D. The commissioner shall give notice of a decision and order with respect to the claim to the claimant and to any judgment debtor who has filed a timely response to the claim pursuant to § 32-2188.01 as follows:

1. If the commissioner denies the application, the notice shall include the following:

The claimant's application has been denied. If the claimant wishes to pursue the application in court, the claimant must file the application in the court in which the underlying judgment was entered within six months after receiving this notice, pursuant to § 32-2188.05, Arizona Revised Statutes.

2. If the commissioner's decision is to make a payment to the claimant out of the real estate recovery fund, the following notice shall be given to the judgment debtor with a copy of the decision and order of the commissioner:

The decision of the Arizona state real estate commissioner on the claim of (Name of claimant) is to pay $__________ from the real estate recovery fund. A copy of that decision and order is enclosed.

Pursuant to § 32-2188, subsection I, Arizona Revised Statutes, all of your licenses and license rights under title 32, chapter 20, Arizona Revised Statutes, will be terminated effective on the date of the payment, and you will not be eligible to apply for reinstatement of any of those licenses until you have satisfied the underlying judgment and reimbursed the real estate recovery fund for this payment, including interest at the prevailing legal rate.

If you desire a judicial review of the commissioner's decision and order or the termination of your licenses and license rights, you may petition the superior court, in the county in which the judgment that is the basis of this claim was rendered, for a judicial review. To be timely, you must file the petition with the court within 30 calendar days after receiving this notice.