One of the most important things for anyone looking to sell their home in Arizona to understand is what must be disclosed to potential buyers. Home sellers will commonly start the process by figuring out exactly what information they have to share with potential buyers and it is natural to have some confusion. The good news is there are some simple guidelines that will help any seller disclose all the required information. Here is what you need to know about real estate disclosure laws in Arizona.
Arizona Residential Seller’s Property Disclosure Statement
Anyone that has bought or sold a home in Arizona should be familiar with the Residential Seller’s Property Disclosure Statement, commonly known as SPDS. The Arizona Association of Realtors created this standard form to simplify the disclosure process for sellers. If you are working with a Realtor, it is typically one of the first things he or she will go through with you as a part of the listing process. For those sellers that are looking to sell their home without the representation of a real estate agent, you will want to carefully read through and complete the form by sharing all the information detailed on the form.
Understanding the SPDS and Disclosure Requirements
For starters, all known material information and any defects or issues with the property must be disclosed in the SPDS. There are six sections to work through that cover the required areas of disclosure for all sellers. Here are some of the key points for each section:
Property and Ownership
The disclosure statement starts with the key details of the property. Among other things, this section covers information like the address, year built and ownership status of the property. You must disclose if the property is owner-occupied, leased, foreclosed or vacant. For rental properties, the seller must disclose when the current lease expires. If the property is part of a homeowners association, the seller must include all the pertinent details of the homeowner association fees and when they are due as well as other pertinent information. The seller must also include any known proposed or existing assessments the potential buyer will need to pay. Any existing liens or easements on the property must be detailed as well.
Building and Safety Information
The second section covers any known issues or defects with the roof or structure of the building. Among other things, sellers are required to disclose known leaks and repairs in the roof. They must also share any warranties on the roof, including whether those warranties will transfer ownership. Sellers must also share any known issues with the foundation, walls, ceiling, doors and windows.
As a seller, it is important to understand that no issues are too small to share. If you have had any small repairs or issues, simply detail what you know about what happened and what you did to address the matter. This section also requires sellers to disclose any known wood infestations. If the property had any issues with termites or wood destroying insects, make sure to disclose the details and what treatments were used to correct the issue. Sellers should also detail any issues with heating and air conditioning systems, plumbing, and electrical systems. If the home has a pool, hot tub or water feature, there is a section to detail any known issues or defects.
The section ends with a catch-all miscellaneous section that is particularly important for Arizona sellers. If your home has ever had scorpions, bees, reptiles or bed bugs, this must be disclosed to the potential buyer. It also covers any work that might not exactly fit into one of the previous categories. Make sure to even share things like landscaping work, appliance changes, and other property improvements, even if they seem small.
Utilities
The third section covers all the utility services used on the property. The seller will need to list the provider for each utility, like electrical, fuel, cable, internet, phone, garbage, water and fire. Sellers must disclose if there are any known drinking water problems. They must also include if any alternative power systems, like solar or wind, are being used on the property. While this section is short, it is still important to be thorough.
Environmental Information
This section requires sellers to disclose any known issues with soil, drainage, erosion, fissures and more. Sellers must detail whether these problems occurred in the past and were fixed or whether they are still an issue. Many sellers are surprised this section includes questions about whether the property is subject to issues like airport noise, traffic noise, rail line noise, nearby landfills, and even odors. There are also questions about any known contaminants, like asbestos, radon gas, lead-based paint and underground storage tanks. This is another section where it is advisable to disclose anything you can think of that can be considered material to the property. This allows the buyer to make their decision with pertinent information and eliminates your liability down the road if they try to claim they were not provided correct or complete information.
Sewer and Waste Water Treatment
The fifth section of the SPDS covers the property sewer and waste water system. Sellers must disclose if the property has had a professional verify the existing sewer connection and what type of sewer is being used, including the name of the provider. If there are any known issues in the past with the sewer and waste water system, the seller must provide all details of the issue and what repairs were performed to correct the problem. One of the final parts of this section requires sellers to disclose the last time an inspection was performed on the sewer or waste water system.
Other Conditions and Factors
The final section requires sellers to disclose any additional material information about the property that has not been included in the previous sections. It can be common for sellers to dismiss this section and assume that previous sections cover all the important matters. This is another place where the best practice is to share anything and everything that could potentially impact the long term value of the property.
Arizona also requires sellers of homes built before 1978 to include a lead-based paint disclosure notice. Real estate contracts with Realtors must also include a comprehensive loss underwriting exchange report (CLUE) that details all insurance claims in the past 5 years (or as long as the seller has owned the home).
Arizona Laws on Property Disclosure
The state of Arizona does have some laws in regards to what does not need to be disclosed. Sellers do not have to disclose if a death has occurred in the home or whether anyone residing in the home has HIV or other diseases. Sellers are also not responsible for disclosing whether sex offenders live in the neighborhood, even if known to them.
Error on the Side of Caution and Disclose What You Know
It is common for sellers to ask if they really have to disclose certain details they think are small or unimportant. They will commonly think that it will make it more difficult to sell their home or it will sell for a lower price. This line of thinking opens the seller up to substantial legal risks. When it comes to completing your property disclosure form, share absolutely everything that you can, unless Arizona law specifically addresses that you do not have to disclose. All buyers have an opportunity to hire professional home inspectors and specialists to review everything of interest to them. This allows them to assess if any additional specialists should be involved during the escrow process and reduces the risk of any future legal claims for non-disclosure.
Work with an Expert Real Estate Attorney in Arizona
The attorneys at Gottlieb Law focus on real estate law. We work with buyers and sellers to protect their interests in real estate transactions of all types. Our firm can review potential real estate disclosure forms and contracts. Our attorneys can also assist in pursuing a claim if material facts were not disclosed during a home sale. Contact our firm today at 602-899-8188 or schedule an appointment on our contact us page.