Imagine buying the lot for your dream home and afterward being informed by the Arizona Department of Real Estate that you can’t use, build on or sell your lot.
You discover this delayed action was because ADRE didn’t inspect an administrative report submitted years before, and didn’t record the report or any findings of the reports’ compliance (or noncompliance). Years later, after numerous sales of the property, ADRE tells you there was a mistake in the report and you cannot use, build on or sell your property. This happened in Maricopa County.
In fact, one couple completed their home four years ago and can’t move in although they’re still obligated to make mortgage and property tax payments.
The ADRE lobby machine successfully torpedoed citizens’ bill SB1491, intended to make the agency disclose its documents, be accountable for its actions, and put the public on notice of property risks (the DAN measure). This was an effort to eliminate the ADRE double standard requiring citizens to disclose, be accountable and give notice by recording documents, but documents produced by and under ADRE’s direction are not recorded and possible enforcement actions are not disclosed, so we have no notice, no disclosure and no ADRE accountability.
Arizona has taken residential property rights without a hearing and not for a public use or for a developer. In fact, the properties can’t be used at all.
Years after the initial land owner sold, ADRE decided it was illegal and summarily declared dozens of property owners can’t use, build on or sell their property. This can happen anywhere in the state and is authorized under ARS 32-2183. So much for Proposition 207!
SB1491 was drawn up to prevent this government abuse, but the bill was watered down beyond recognition. The threat of a veto shouldn’t deter our representatives from doing what is right by correcting statutes authorizing an agency to harm citizens.
Unfortunately, statutes intended to protect the public also created the ability for ADRE to avoid disclosure, notice and accountability and authorized abuse of a public trust worse than a government taking such as the Bailey Brake Shop or Kelo cases. It’s worse because this is a government taking without notice, a hearing or just compensation.
It’s ironic that the agency responsible for protecting the public from real estate abuse, by ensuring disclosure and records recordation, is not required to record real estate records. More reprehensible is that ADRE doesn’t record a warning or disclaimer informing us that it can declare at any time, your property can’t be used based on someone else’s mistake on an unrecorded administrative real estate report that ADRE reviewed only for “administrative completeness.” ADRE has no obligation of disclosure, recordation, inspection or notice of a land applications’ compliance with state law.
ADRE stated before the House Homeland Security and Property Rights Committee that requiring ADRE to be transparent and accountable by recording real estate documents would hinder its ability to enforce the statute against unscrupulous subdividers. Nothing could be further from the truth. In fact, these requirements would help ADRE fulfill its mission to protect the public by making mandatory disclosure of what ADRE finds in its property evaluations and inspections. These documents should be recorded so our title companies can find them in property records searches. To make matters worse, after more than 100 days, my ADRE government document request has only been partially fulfilled. The very important subdivision file is “missing.”
Most title insurance policies don’t cover unrecorded real estate documents. This means your title insurance policy is worthless if ADRE determines years later there was a mistake. It doesn’t matter how insignificant the mistake. A minor mistake such as a clerical error empowers ADRE to declare a prior land ownership transfer illegal. Who will finance property without title insurance covering these unrecorded documents?
If you doubt ADRE will punish innocent subsequent land owners, or believe it can’t happen to you, you are wrong. Of 88 subsequent owners wanting to build their dream homes in Maricopa County, and more than three years of litigation, only a handful are left to defend their rights. The damage a family suffers from this abuse is devastating. ADRE did nothing to protect the people it was charged to protect. To the contrary, ADRE let the original owner who made the mistake off the hook and punished the innocent subsequent buyers.
In its present weakened form, SB1491 will do nothing to protect the public from this unchecked government abuse. If you’re buying a home or land, ask your real estate agent, title company and ADRE for proof that any prior land division transfers are legal and mistake-free. I’ll bet they can’t provide it.
Bill Sandry lives in Mesa.