Government Policy, Real Estate and You! with Liz Recchia

WeMAR/WeSERV and the future of our Association – On October 22nd WeMAR hosted the last Government Affairs Advisory Council Meeting for 2019, and the last WeMAR association Government Affairs Advisory Council. The final vote for the merger between WeMAR and SEVRAR was taken on October 23rd, and our two associations will be merging to be known as WeSERV.

Roger Nelson, our CEO, update us on the merger process and our future association at the October 22nd Government Affairs Advisory Council Meeting. The merger is confirmed by NAR, and we are officially known as WeSERV. Our membership area includes West Maricopa County, East Maricopa County, Pinal County, Douglas.

The New LLC Law in Arizona – Also at our October 22nd Government Affairs Advisory Council Meeting, David Brnilovich and Garrett Olexa from Jennings Strouss Law Firm spoke to us about the new LLC law and the Arizona Supreme Court decision related to fiduciary owed to the LLC by members, managers and member managers. Read the blog post,watch the video and listen to the podcast.

New Property Management Specific POA from the Department of Revenue – If you are a property manager you know how frustrating and risky it has been to submit a mandated Department of Revenue Power of Attorney that did not accurately address your position as a property manager. The WeMAR TPT Task Force spent many hours meeting with the Department of Revenue over the course of 2019 to help create a new, property management specific Power of Attorney form.

You may access this new POA at the Arizona Department of Revenue or at www.wemargad.org. Also, in the blog post Property Management Specific POA at Department of Revenue, you will find some highlights of the form like the ability to easily add staff members with permission to discuss client issues with the Department of Revenue and a property management specific Department of Revenue phone number and email. Please use the phone number and email as they are staffed with Department of Revenue staff familiar in property management issues.

Song Credits

WEPA Song Credits:

“Wepa” Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attribution 3.0 License http://creativecommons.org/licenses/by/3.0/

WERQ Song Credits:

“Werq” Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attribution 3.0 License http://creativecommons.org/licenses/by/3.0/

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As of September 1, 2019, Arizona’s LLC and PLLC law has changed. For LLCs created on or after September 1st, they must comply with the new law at the time they are created. For existing LLCs there is a grace period of 1 year. The biggest change to LLC law is the fiduciary requirement placed on managers, members and managing members.

In June 2019, the Arizona Supreme Court ruled in Sky Harbor Properties, LLC v. Patel Properties, LLC and found a similar fiduciary requirement under agency law should be applied to LLCs. So, essentially, existing LLCs should be actively complying with the new LLC law in order to comply with the Court decision.

For REALTORS® and investors who have the LLC as part of their business model, you should know there are now default provisions in the new LLC law you may want to change through the Operating Agreement. Some of the provisions you may want to address are:

The fiduciary duties of members and managers – The default provisions assume an agency relationship between managers, members and the LLC entity. You can change this in your Operating Agreement and limit the fiduciary relationships.

Define the Managing Members, their responsibilities and duties in the Operating Agreement

Distributions to members – There are tax and legal implications if you do not change the default distribution provisions contained in statute.

Read ARS section 29-3301 – to understand the default agency relationships and decide if you need to address this issue in the Operating Agreement

Understand how and why you may or may not want to hold your interest as Tenants in Common, Joint Tenants with right of survivorship or as Community Property with right of survivorship.

The bottom line is the Operating Agreement is very important and can make the difference legally and financially.

If you are a broker or agent who represents investors or LLCs as part of your business, there are some considerations you may want to ask your attorney about. For example: What happens if your brokerage lists an LLC property for sale and also represents the buyer LLC? While the brokerage would disclose its dual agency relationship, it may not know there are members common to each LLC. Failure to disclose common members and any pertinent information is a violation of fiduciary, and yet in a multi member LLC, members may not even know they are part of both LLCs.

If you are an agent or broker who particulates in investments, you will have additional questions to ask your legal and tax professional.

On October 22, 2019, WeMAR will be hosting a Lunch & Learn for members with Attorney David Brnilovich – Jennings Strouss Law Firm. David will discuss the new LLC law and how we can and our clients can update the Operating Agreement. Please register at www.wemargad.org so that we have food and seats for all.

Song Credits:

WEPA Song Credits:

“Wepa” Kevin MacLeod (incompetech.com)

Licensed under Creative Commons: By Attribution 3.0 License

http://creativecommons.org/licenses/by/3.0/

WERQ Song Credits:

“Werq” Kevin MacLeod (incompetech.com)

Licensed under Creative Commons: By Attribution 3.0 License

http://creativecommons.org/licenses/by/3.0/

Learn more about your ad choices. Visit megaphone.fm/adchoices

On September 10th 2019, Senator Pratt, Representative Roberts and Representative Cook joined the Western Pinal Chapter of WeMAR to discuss several issues, among them: water in Arizona. During that event, Senator Pratt gave us an overview of water in Arizona since the 1980’s and some of the issues currently being discussed, so that water will continue to flow. Senator Pratt is the State Senator for District 8 in Pinal County. In the Senate he is the Chair of the Natural Resources and Energy Committee and the Vice-Chair of the Water and Agriculture Committee. Senator Pratt has a long history in Pinal County and in Arizona water discussions.

You can see the full event video: Visit with Legislators – Western Pinal Chapter of WeMAR at www.wemargad.org. Click on videos.

WeMAR GAD: Advocating for private property rights, the right to private contract and your business!

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com)

 Licensed under Creative Commons: By Attribution 3.0 License

 http://creativecommons.org/licenses/by/3.0/

WERQ Song Credits:“Werq” Kevin MacLeod (incompetech.com)

Licensed under Creative Commons: By Attribution 3.0 License

http://creativecommons.org/licenses/by/3.0/

Learn more about your ad choices. Visit megaphone.fm/adchoices

MAG’s Luke Air Force Base Targeted Growth Plan – On Tuesday, September 17th, WeMAR members John Kodlick and Jay Otlewski, and I joined cities, educators, economic development experts and Luke Air Force Base representatives to review the information already gathered for the Luke Air Force Base Targeted Growth Plan. 

The purpose of this study is to provide information to F-35 pilots and other Luke Air Force Base personnel on opportunities for housing, education, child care, recreation, jobs, business and amenities here in the West Valley. One category lacking in information though, private post-secondary education in the West Valley.  please let me know by September 27th private post-secondary education opportunities.

The Surprise Luke Air Force Base Map Ordinance – Also on September 17th, WeMAR presented our long-time concerns regarding the Surprise ordinance requiring REALTORS° to carry the Surprise Luke Air Force Notification Map with them at all times. WeMAR members, Rae Goepfert, Bill Gaddis and Jackie Martin joined me at the Surprise City Council meeting.

You can read my comments and watch your fellow members present to the City Council at www.wemargad.org. WeMAR asked the Council to repeal this ordinance.

The public comment period is now open for those who wish to let ADOT know their preference for the proposed North-South Corridor extending from Apache Junction to I-10 at Eloy. The study also includes the extension of State Route 24.

To read the study and more information online, find dates of the public hearings and find the libraries with the documents for review, go to www.wemargad.org.

GAD Events – We have two GAD events left in 2019, so please join us for Visit with Legislators here at WeMAR on September 24th from 9am to 12 noon and our last Government Affairs Advisory Council meeting on October 22nd from 10am to 1pm.

You can register for both of these events at www.wemargad.org. They are free, but please register so we have food and seats for all.

Song Credits

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com)

 Licensed under Creative Commons: By Attribution 3.0 License

 http://creativecommons.org/licenses/by/3.0/

 WERQ Song Credits:“Werq” Kevin MacLeod (incompetech.com)

Licensed under Creative Commons: By Attribution 3.0 License

http://creativecommons.org/licenses/by/3.0/

Learn more about your ad choices. Visit megaphone.fm/adchoices

Senate Bill 1703, the Affordable Housing Credit Improvement Act of 2019, was discussed at the August Arizona Department of Housing Forum. it will dramatically impact state and local affordable housing.

This bill expands the 1986 IRS code to reform low income housing tax credits. It will increase local housing authority credit by 50% over 5 years.

According to the U.S. census, the 2017 median household income for Maricopa County was $58,580. 80% of this is an income of $46,864 and 60% is an income of $35,148. In June 2019, the Arizona Department of Housing released updated income limits for housing affordability programs for both renters and owners. You can read more about the updated limits at www.wemargad.org.   

SB 1703 topics discussed in this podcast include:

Bond financed developments

Tenant Income Eligibility

Housing Vouchers

General Public Use rule for Bond Financed Properties

Establishment of Minimum 4% Housing Credit Rate

Rights Related to Building Purchase

Ten Year Rule and Related Party Rule

Basis Boosts  and other provisions

Don’t forget, we have two Visit with Legislator events coming up. Sept. 10th we will be in Pinal speaking with Representatives Cook and Roberts and Senator Pratt. On Sept. 24th we will be at WeMAR in Peoria speaking with Represented Dunn and Senators Kerr and Gray.

These are free events, but we ask you to register so that we have food and seats for all. You may register at www.wemargad.org.

WeMAR GAD: Advocating for private property rights, the right to private contract and YOUR business!

Song Credits:

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com)

 Licensed under Creative Commons: By Attribution 3.0 License

 http://creativecommons.org/licenses/by/3.0/ 

WERQ Song Credits:“Werq” Kevin MacLeod (incompetech.com)

Licensed under Creative Commons: By Attribution 3.0 License

http://creativecommons.org/licenses/by/3.0/

Learn more about your ad choices. Visit megaphone.fm/adchoices

HUD releases newly approved condo rules:  On August 14, 2019 HUD finally released the long-awaited condo rules. The new rules include a new condo approval process.  The new policies become effective Oct. 15, 2019.

You may read the new condo regulations and the updated FHA Single Family Handbook at www.wemargad.org.

Update on the two Lawsuits Against NAR –Moehrl v.NARand Sitzer v. NAR

Earlier this month NAR moved to have both lawsuits dismissed based on the fact the lawsuits misrepresent the NAR MLS Policy and Code of Ethics.

You can read both lawsuits at www.wemargad.org and read NAR’s comments as well.  NAR has talking points you can share with your clients.

Visit with Legislators:

This year we are expanding this event to include both West Maricopa County and the Western Pinal Chapter.

Join us on Sept. 10th from 9am to 12noon at The Property in Casa Grande as we welcome Representative Cook, Representative Roberts and Senator Pratt. This event has been approved for 3 CE in Legal Issues by Az DRE.

Join us on Sept. 24th from 9am to 12noon at WeMAR in Peoria as we welcome Representative Dunn, Senator Kerr and Senate Majority Leader Gray.

These are free events, but we ask you to please register to attend so that we have seats and food for all. You can register and read more about these events at www.wemargad.org.

WeMAR GAD: Advocating for private property rights, the right to private contract and YOUR business!

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com)

 Licensed under Creative Commons: By Attribution 3.0 License

 http://creativecommons.org/licenses/by/3.0/

WERQ Song Credits:“Werq” Kevin MacLeod (incompetech.com)

Licensed under Creative Commons: By Attribution 3.0 License

http://creativecommons.org/licenses/by/3.0/

Learn more about your ad choices. Visit megaphone.fm/adchoices

On June 21, 2019 the U.S. Supreme Court ruled 5-4 in an eminent domain case that is sure to have long lasting ramifications, Knick v. Township of Scott, Pennsylvania.

The Town of Scott originated an ordinance requiring property with a cemetery must be open to the public during daylight hours. Rose Marie Knick owns 90 acres with an old family cemetery on it. She was sighted for violation of the ordinance.

Rose Marie Knick filed a takings claim in Federal Court referencing the Fifth Amendment of the United States Constitution.

In the end, the majority overruled the Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City decision from 1985, which created a Catch-22 for property owners.

You can read an contemporaneous review of Williamson County: Ripeness for Taking Clause: Finality and exhaustion in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City by James D. Smith, Ecology Law Quarterly – Berkeley Law.

It is the ripeness issue that has been the problem with property owners getting just compensation for government takings for over 35 years. Since the Williamson decision, property owners were routinely denied access to Federal Courts to adjudicate their claim. They were required to first exhaust all state courts and administrative processes before making a Federal claim. But, when they tried to file in Federal Court their case was not accepted due to the full faith and credit statue.

The dissenting justices in Knick v. Township of Scott, Pennsylvania wrote quite a bit about honoring stare decisis and idea that the Fifth Amendment right hinges on whether there is a promise of compensation.

The majority justices found that a property owners rights are violated when a government takes all or part of the property without compensation. It is the taking that triggers a property rights violation, not the promise of compensation. They concluded:

“that the state litigation requirement imposes an unjustified burden on taking plaintiffs, conflicts with the rest of our takings jurisprudence and must be overruled. A property owner has an actionable Fifth Amendment takings claim when the government takes his property without paying for it.”

Majority Justices:

Chief Justice Roberts (authored the opinion), Thomas (authored concurring opinion), Gorsuch, Kavanaugh

Minority Justices:

Kagan (authored dissenting opinion), Ginsburg, Breyer, Sotomayor

Visit www.wemargad.org to read more about this opinion.Click on Judiciary.

WeMAR GAD: Advocating for private property rights, the right to private contract and YOUR business!

Song Credits:

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com)

 Licensed under Creative Commons: By Attribution 3.0 License

 http://creativecommons.org/licenses/by/3.0/

WERQ Song Credits:“Werq” Kevin MacLeod (incompetech.com)

Licensed under Creative Commons: By Attribution 3.0 License

http://creativecommons.org/licenses/by/3.0/

Learn more about your ad choices. Visit megaphone.fm/adchoices

VA Loan Denials due to HOA rental restrictions;

According to section 36.4363c6, there can be no prohibition or restriction on an owner’s right to lease his or her unit. There are some acceptable restrictions: a requirement that leases have a minimum 1-year term and community age restrictions are two of those restrictions.

If your client is selling or considering purchasing in a HOA and has VA benefits, make sure to check the association governing documents before offering VA terms or submitting an offer with VA financing.

You can read a more detailed article regarding this issue at www.wemargad.org.

Election Issues in Maricopa County:

In October 2018, WeMAR hosted Maricopa County Supervisors Clint Hickman and Steve Gallardo. We discussed  many topics, but top of mind was elections issues. You can watch the video of Coffee with Maricopa County Supervisors at www.wemargad.org.

Supervisor Gallardo had previously worked a part of the Maricopa County election staff and gave us valuable insights into planning and executing a successful election day.

In the past three years, Maricopa County has continued to have issues on election day across the County, despite the County Board of Supervisors spending time and money on planning, technology and providing additional resources for Maricopa County elections.

On June 26, 2019, the County Board of Supervisors made a dramatic change to  County Elections by creating a new post of Director of Election Day and Emergency Voting Procedures. This new director will report directly to the County Board of Supervisors. You can read the report at www.wemargad.org.

At the same time the Supervisors created the new position, they approved a budget for the elections department of $3.2 million for staffing needs, another $6.1 million for a 3-year contract with Dominion Voting Systems to provide voting systems for tabulation and voting and $1.1 million for IT and infrastructure improvements.

WeMAR Candidate Training 2020:

WeMAR will be hosting Candidate Training Academy again in 2020. This time we are hoping to have three trainings: one in Douglas, one in West Maricopa, and we will co-host a training with the Flagstaff Association of REALTORS in Flagstaff.

Watch www.wemargad.org for updates on this event.

Visit With Legislators:

Join us on September 10th in Pinal or September 24th in West Maricopa for our Visit with Legislators event. You can read more and register at www.wemargad.org. Click on Upcoming Events

WeMAR GAD:  Advocating for private property rights, the right to private contract and YOUR business!

Song Credits:

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com)

 Licensed under Creative Commons: By Attribution 3.0 License

 http://creativecommons.org/licenses/by/3.0/

WERQ Song Credits:“Werq” Kevin MacLeod (incompetech.com)

Licensed under Creative Commons: By Attribution 3.0 License

http://creativecommons.org/licenses/by/3.0/

Learn more about your ad choices. Visit megaphone.fm/adchoices

In June 2019, Congress passed, and the President signed, a bill eliminating the VA loan cap. The elimination of the cap was part of the Blue Water Navy Vietnam Veterans Act (HR 299).

At one point last summer, it was proposed to raise the VA loan fees to 0.5% for non-disabled vets in order to pay for some the provisions in the bill. NAR sent a letter to the Senate Veterans Affairs Committee basically stating the value of the program to veteran homeownership and the need for VA loan fees to be based on the specific loan risk, not increased to pay for other programs. You may read NAR’s letter at www.wemargad.org.

Recently, we have had questions regarding VA loan denials in some areas, specifically Sun City.  It turns out that under VA underwriting guidelines, association rent restrictions must not limit rentals to less than a year. You can read more at www.wemargad.org.

On April 18th 2019 HUD released Mortgagee Letter 19-06 detailing changes in down payment assistance from government entities for FHA borrowers.

Here are some of the core issue for HUD: They are losing money according to HUD’s 2018 annual report to Congress.

In response to the lawsuit filed by the Cedar Band of Paiutes, HUD extended the effective time for its new rules from April 18, 2019 to July 23, 2019 in Mortgagee Letter 2019-07. Shortly after the recording of this podcast, HUD announced it would be suspending the changes contained in Mortgagee Letter 19-06 “until further notice”.

Don’t forget, we have a Visit with Legislators scheduled in September. One in Pinal and one in Peoria. Check the GAD events calendar at www.wemargad.org for the legislators we will have as our guests.

WeMAR GAD: Advocating for private property rights, the right to private contract and YOUR business.

Song Credits:

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com)

 Licensed under Creative Commons: By Attribution 3.0 License

 http://creativecommons.org/licenses/by/3.0/

 WERQ Song Credits:“Werq” Kevin MacLeod (incompetech.com)

Licensed under Creative Commons: By Attribution 3.0 License

http://creativecommons.org/licenses/by/3.0/

Learn more about your ad choices. Visit megaphone.fm/adchoices

On June 10th 2019 NAR announced they had invested in Propy.com, a blockchain technology real estate platform. What is blockchain technology and how is it impacting real estate?

Listen as Leslie Pico, the first real estate agent in Arizona to close a blockchain transaction in real estate, describes this technology and our business. Leslie was our guest at the WeMAR Economic Development Forum – 2018.

You may read more about NAR’s investment, Propy.com and blockchain in real estate at www.wemargad.org.

WEPA Song Credits: “Wepa” Kevin MacLeod (incompetech.com)

 Licensed under Creative Commons: By Attribution 3.0 License

 http://creativecommons.org/licenses/by/3.0/

WERQ Song Credits:“Werq” Kevin MacLeod (incompetech.com)

Licensed under Creative Commons: By Attribution 3.0 License

http://creativecommons.org/licenses/by/3.0/

Learn more about your ad choices. Visit megaphone.fm/adchoices