By: Cory L. Braddock
With ongoing price volatility in Arizona’s residential real estate market, homeowners may be tempted to become recreational landlords. Anyone considering renting their home, however, should be aware that Arizona law requires residential rental property owners to register their residential rental property with the county assessor’s office, presumably so that assessor can assess the appropriate taxes to the property owner. See A.R.S. § 33-1902.
The owner of a residential rental property is required to maintain the following information with the county assessor:
- The name, address, and telephone number of the property owner;
- The street address and parcel number of the property; and
- The year the property was built.
Under Arizona law, residential rental property may not be occupied until after the property owner provides this information to the assessor’s office. A.R.S. § 33-1902(C). As you might expect with increased tax consequences on the line, some property owners rent their residential rental property without ever providing the required information to the county assessor’s office.
Anyone who thinks they can ignore the statute should carefully heed the two penalty provisions found in A.R.S. § 33-1902, which are designed to encourage voluntary compliance.
First, if a property owner fails to register their residential rental property with the county assessor, the city or town where the property is located may impose a civil penalty of up to $150 per day for each day of the violation after the date of the most recent notice of assessed valuation. A.R.S. § 33-1902(G). Upon receiving notice of the violation, however, the property owner can avoid the fine by registering the property within ten days of receiving the notice. Id.
Second, for any unregistered residential real property occupied by a tenant, under certain circumstances, the tenant can elect to terminate the tenancy and recover any unpaid rent. See A.R.S. § 33-1902(C). A tenant hoping to take advantage of this penalty provision is required to give the property owner a ten day notice to comply with the statute. Id. If the property owner continues to ignore the statutory requirement to register the property, the tenant may terminate the rental agreement and the property owner is required to return any pre-paid rent. Id.
The take-away is simple – if you are a residential rental property owner, comply with Arizona law and register your property with the county assessor. Otherwise, be prepared to suffer the consequences.