State tells Rathbun Realty to cease and desist real estate work

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State tells Rathbun Realty to cease and desist real estate work

CREATED Sep 5, 2012

Reporter: Craig Smith

TUCSON (KGUN9-TV) - The state of Arizona tells a major rental management company to cease and desist.
So what does that mean for hundreds of owners and renters?

Rathbun Realty manages more than 700 properties in Pima County.

Last month this company reported $1.8 million dollars missing and accused an employee of embezzling from trust accounts that hold deposits.
But now the Arizona Department of Real Estate has slapped them with a Cease and Desist Order that forbids any real estate activity.

We wanted to know what that means for tenants and home owners who hired Rathbun to manage their properties.

It worries renters like "Michelle".

She told our KGUN9 news crew: "I expected someone to come to the door but I didn't think it was going to be you."
"Michelle" asked us not to show her face or use her real name.  She's afraid Rathbun Realty will be angry she talked with us and she's afraid of what the state order could mean for her.

She says:"It actually scared me to death when I saw it on the news because people start calling in, and I thought well, am I gonna be evicted tomorrow and then, my second thought was I just paid rent.  Where does my rent check go, was I gonna have to make another rent check out and to who.."

Betty Rathbun says, ""It doesn't mean anything to you if you're a tenant.  Your rent is still due.  It still needs to be paid.  And the owners have a right to have their rent paid."
The state order says company officials failed to come to hearings to explain what happened to missing money and says the company failed to meet it's obligation to protect the interests of renters and landlords.

KGUN9 reporter Craig Smith asked Rathbun: "When it says cease and desist, the language makes it seem as if you can't indulge in any real estate activities." 

Rathbun: "It does say that.  It says cease and desist until the compliance is met.  Our lawyers are working with the Dept of Real Estate right now to get us in compliance."
Rathbun says she and her company did try to give the state the information it wants and says three real estate lawyers told her she can keep working while she resolves the issue.

The Arizona Department of Insurance would not comment on the case because it is still open.