Managing your Arizona properties from another state? What you need to know to avoid fines!
Over the last two years we have seen a flood of investors that have re-entered the Phoenix metro market taking advantage of great homes at low prices. Many of these investors have decided to take a long term investment approach by renting their properties out while they appreciate in value. When renting out properties when you live out-of-state it is important that investors understand rental laws in Maricopa County, particularly in this case, A.R.S 331902. This statute covers registering properties with the county, as well as outlining the necessity to have a statutory agent that lives in Arizona.
Under A.R.S. § 331902 an owner of a residential rental property in Maricopa County that resides out of the state ‘must register certain information relating to the property and its ownership with the Maricopa County Assessor. ALL owners of residential rental properties must register their properties regardless of whether the tenant is a family member. Under the statute, out-of-state owners must designate a statutory agent who lives in Arizona who will accept legal service on behalf of the owner’.
How does Maricopa County find out if the property being rented and is not registered, or if there is no statutory agent? Well, I’ve heard all kinds of stories. The most typical is when the tax records indicate the name of the owner, but the utilities are turned on and in another person’s name. This is typically a red flag to the county that the property is in fact a rental. Also, tenants can become unhappy with their owner/landlord and can go to the county assessor’s website and look up this information. If they find no registration or no statutory agent assigned to the property they can call it in to the county, and even attempt to break the lease.
What are the penalties for not registering or assigning a statutory agent? As stated above, the tenant has an opportunity to legally break the lease. That’s right, under this law the tenant can issue a 10-day notice to comply with this statute, and if the owner/landlord does not, the tenant can break the lease with no penalty and be refunded all prepaid rent and deposits. Also, the fines are substantial. They are $1000 plus $100 per month of non-compliance, or $150 per day of non-compliance depending on the date the property was acquired and the date of notice of assessed value. Either way, these are very hefty.
The best advice here is to make sure that you are in compliance with the AZ state laws regarding residential rental properties. If an investor is going to manage the property themselves, I always recommend consulting an attorney and a tax professional. For many investors, hiring a reputable property management company is the easiest way to make sure they are in compliance. Either way, the most important thing is to ensure you are operating within the guidelines of the law.
– Nick and Wendy Galloway, Go With Galloway, Keller Williams Realty Professional Partners
Nick and Wendy Galloway is the operator of the Go With Galloway team at Keller Williams Realty. Together we have over 15 years of real estate and property management experience. For more information on Phoenix real estate and property management Go With Galloway at 623-688-1434 or online at www.GoWithGalloway.com
Information within was provided from the Maricopa County Assessor’s Office, ADRE, and the AZ State Legislature.