Recovery Fund | Arizona Real Estate Exam Prep

by | Jan 29, 2024 | Knowledge

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Arizona real estate recovery fund exam prep


The Real Estate Recovery Fund in Arizona serves as a financial safety net for consumers who suffer a monetary loss due to the wrongful actions of a licensed real estate agent or broker. It’s designed to provide compensation in situations where the consumer is unable to recover damages through other means, such as insurance or litigation.


What is the purpose of the Arizona Real Estate Recovery Fund?

The Fund compensates individuals who have incurred losses in real estate transactions as a result of fraudulent, deceptive, or dishonest practices, or violations of the real estate law by a licensed agent or broker.


How is the Recovery Fund funded?

In Arizona, the Real Estate Recovery Fund is funded primarily through the fees paid by licensed real estate agents and brokers for:

  1. Initial Licensing and Renewal Fees: A portion of the fees collected from real estate professionals when they first obtain their license, and when they renew it, is allocated to the Recovery Fund.
  2. Additional Assessments: In some cases, if the Fund’s balance falls below a certain threshold, additional assessments may be levied on licensed agents and brokers to replenish it.
  3. Fines and Penalties: The Fund may also receive financial contributions through fines and penalties imposed on real estate professionals for various violations.

This system ensures that the Real Estate Recovery Fund has the necessary resources to compensate consumers who suffer losses due to the wrongful acts of licensed real estate professionals.


How are clients reimbursed?

Eligibility for Claims: To be eligible to make a claim against the Fund, the consumer must have obtained a final civil court judgment against a licensed real estate professional for actions directly related to a real estate transaction. Imagine you’re involved in a property deal, and something goes wrong because the real estate agent did something they shouldn’t have. This Fund is there to help you get some money back if you’ve lost out because of their actions.

Filing a Claim: Consumers must file a claim within a certain time frame after the court judgment is rendered. The claim process involves submitting required documentation to the Arizona Department of Real Estate, which administers the Fund. If the court says the agent owes you money, you can then fill out the forms and send them to the department who manages the Fund in Arizona. 

Compensation Limit: There’s a cap on the amount that can be paid from the Fund for claims against a single licensee, as well as a per-transaction limit. This means that while the Fund can provide significant relief, it may not cover all losses in cases involving large sums of money. There’s a maximum amount you can get. So, if a lot of money was lost, the Fund might not cover it all, but it will certainly help. Currently, the limit is $30,000.


Other good things to know for the exam

Subrogation Rights: If the Fund pays a claim, it acquires the right to pursue the licensee for reimbursement. This means the Fund can take legal action against the real estate professional to recover the amount paid to the consumer. If the Fund gives you money, they’ll then try to get that money back from the real estate agent.

Educational Role: The existence of the Fund also serves an educational purpose, raising awareness among consumers and real estate professionals about the importance of ethical and legal conduct in real estate transactions. Having this Fund also helps everyone understand how important it is to play by the rules in real estate. It’s a reminder to agents to always do the right thing.



The Real Estate Recovery Fund is an essential component of consumer protection in the Arizona real estate industry, offering a recourse for those who have been financially harmed by the actions of a licensed real estate professional.

*Please be advised that this is intended for students wishing to pass the Arizona real estate licensing exam and NOT legal advice. Please consult with an attorney and the Arizona department of real estate for more information.

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