Actions Shut Down Developer Exploiting Loopholes to Profit At Expense of Arizonans

PHOENIX - This week, the Arizona Department of Real Estate (ADRE) took action to prevent illegal subdividing, also known as “wildcat development,” in Rio Verde Foothills east of Scottsdale. Governor Hobbs previously directed the ADRE to prevent illegal developments that evade Arizona’s consumer protection requirements to the fullest extent allowed under current law.  

This week ADRE sent a Cease & Desist Order against a real estate developer, and today that Order was recorded with the Maricopa County Recorder. In the Order, the Department alleges the developer group failed to obtain a subdivision public report, which among other statutory requirements, in an AMA requires a certificate of assured water supply from the Arizona Department of Water Resources or a written commitment of water service from a designated provider.

“Today I am glad to report the Arizona Department of Real Estate has taken swift action to prevent what it believes is a blatant evasion of consumer protection and water security laws,” said Governor Katie Hobbs. “Rio Verde Foothills has suffered enough as a result of bad apple developers skirting the law and building without first securing a water supply. While we can take action in this case, our laws still fall short of offering true solutions that protect consumers. We must take legislative action to crack down on the loopholes being exploited by developers to profit at the expense of everyday Arizonans.”

This investigation and enforcement action from the Hobbs Administration is part of the Governor’s commitment to protect the water supplies of all Arizonans. Governor Hobbs has prioritized preventing development that circumvents Arizona’s real estate and water laws, and puts Arizonans at risk. By recording the Cease & Desist, ADRE will prevent the final sale of homes until a reliable, 100-year water supply has been identified and proven as a part of the project’s public report.

This investigation was conducted in collaboration with the Attorney General’s Office, and is part of the Executive Branch’s coordination on efforts to protect Arizona consumers.

“Protecting consumers from unscrupulous developers is a top priority for the Attorney General’s Office,” said Attorney General Kris Mayes. “My office remains firmly committed to holding accountable those who violate state law and put Arizonans at risk, especially in areas like Rio Verde Foothills where water is limited. We will continue to work closely with the Arizona Department of Real Estate and the Governor’s Office to protect Arizona consumers.”

“ADRE is charged with protecting Arizona’s property owners and the public in real estate transactions. Arizona’s laws require certain disclosures to ensure prospective purchasers understand, among other limitations or available resources, whether there is water available and what water sources the potential buyer may expect.  Education of developers is key but when subdivision Public Report requirements are not followed, buyers are exposed to an unacceptable risk,” stated Commissioner Susan Nicolson.

In 2023, Governor Hobbs signed Senate Bill 1432, after working across party lines to secure a water solution for the Rio Verde Foothills area, following her veto of an unworkable, partisan bill. Governor Hobbs also charged her Water Policy Council with identifying solutions to the long-standing challenge of wildcat development, which resulted in a slate of consensus recommendations. Unfortunately, real solutions were not introduced by the legislature, and citizens in Rio Verde Foothills and elsewhere remain vulnerable to loopholes that can be exploited to skirt Arizona’s development and water laws. 

More information regarding the Governor’s Water Policy Council Recommendations can be found here.