Arizona Real Estate Lawyer

Arizona's 2024 real estate laws: key updates for agents, buyers, & sellers, impacting licenses, contracts, disclosures, & consumer protection.

Understanding Some of the New 2024 Arizona Real Estate Laws and Regulations

Understanding Some of the New 2024 Arizona Real Estate Laws and Regulations 1280 720 Gottlieb Law
Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

Arizona’s real estate laws are evolving in 2024, and whether you’re a homeowner, buyer, or real estate professional, these changes could impact your next move. With new regulations shaping the way property is bought, sold, and developed across the state, staying informed is more important than ever.

In this overview, we’ll break down the key updates, including new housing options, adjustments to zoning rules, and changes affecting Homeowners’ Associations. Read on to discover what these developments mean for you and how to navigate Arizona’s real estate market in the coming year.

Key Changes in Arizona Real Estate Law for 2024

Arizona’s real estate landscape is set to change in 2024, with new laws aimed at increasing housing options. One major change shaking up Arizona’s property scene is the new rule for cities with over 75,000 people: they have to allow Accessory Dwelling Units (ADUs) on single-family lots. This could mean more housing options and a whole new way to think about your property’s potential [1]. These ADUs, also known as casitas, can be built without onerous design restrictions or additional parking requirements.  Importantly, the new bill does not supersede local building codes and does not prevent restrictive covenants from applying to ADUs within an HOA community.

The new legislation, House Bill 2720, permits homeowners to construct at least one attached (such as a converted garage), detached or internal ADU. [2] This change is designed to boost housing supply within established neighborhoods without necessitating additional land development [1]. To prevent overly restrictive rules, the law includes safeguards against costly or infeasible ADU construction, such as prohibiting excessive setbacks or additional parking requirements [2].

Municipal Zoning and Middle Housing

Another significant change comes with House Bill 2721, dubbed the “middle housing bill.” This legislation requires municipalities with 75,000 or more residents to modify their zoning regulations and other official controls [3]. By January 1, 2026, these cities will be required to open the door to a wider range of housing options. Duplexes, triplexes, and even fourplexes will become permitted uses on lots previously zoned for single-family homes. This move could dramatically reshape the landscape of residential neighborhoods, offering more flexibility and density for housing [3].

The law also mandates that cities allow these multi-family projects within a mile of their central business districts [1]. Additionally, it requires that middle housing projects occupy at least 20% of any development spanning 10 acres or more [1]. This change aims to create more diverse housing options, especially in areas close to city centers.

To ensure the feasibility of middle housing development, the law prohibits municipalities from:

  1. Discouraging middle housing through unreasonable costs, fees, or delays;
  2. Limiting middle housing to a maximum of two floors or imposing a floor area ratio of less than one;
  3. Creating a higher bar for middle housing development, compared to the relative ease of building single-family homes in the same area; and
  4. Requiring owner occupancy or fire sprinklers in these structures. [3]

Homeowner Association Changes

In addition to these changes, Arizona’s 2024 legislation has significant implications for condominium owners, potentially altering the dynamics of property ownership and governance within these communities. House Bill 2141, signed by Governor Hobbs on March 29, 2024, allows condo owners more freedom to renovate or redecorate their units’ interiors without needing approval from the condo board [4]. This includes installing hard surface floors with appropriate noise-reducing underlayment.

Another significant change comes with House Bill 2648, which clarifies the two distinct types of HOA liens: common expense liens (i.e., HOA dues) and individual expense liens (i.e., fines). [4]. Common expense liens, essential for the upkeep of shared property, can be foreclosed as a last resort after one year of delinquency or when the outstanding amount reaches $1,200. However, a home cannot be foreclosed on for individual expense liens due to unpaid fines, providing homeowners with more protection against losing their homes over disputed violations of the covenants [4].  The new law further provides greater protection to homeowners by requiring HOAs to exercise reasonable efforts to settle the claim before initiating a foreclosure action.

These changes aim to create a more flexible and equitable real estate environment in Arizona, addressing housing shortages and protecting homeowners’ rights.

Impact on Property Rights and Development

The 2024 Arizona real estate law changes are set to have a significant impact on property rights and development across the state. One of the most significant updates is the increased variety of housing options available. A new law signed by Governor Katie Hobbs aims to transform unused commercial buildings into affordable housing [5] This legislation allows developers to change or demolish commercial buildings, offices, or mixed-use structures to create residential properties without the need for rezoning [5]

Starting in 2025, cities with populations over 150,000 will be required to allow up to 10% of these structures to be demolished if they’re considered obsolete [5] This change is expected to spark development, as it removes a major hurdle for investors by eliminating the need to seek rezoning or conditional use permits [5]

Updated Case Law on Severance Damages in Easement Cases

Furthermore, the 2024 legal landscape in Arizona has seen updated case law in condemnation cases. This includes updated law on whether severance damages can be sought due to the loss of easements in Common Areas used for freeway expansion projects [7]. The court reasoned that easements aren’t considered parcels of land under the law for purposes of severance damages and therefore you cannot seek proximity damages (a form of severance damages) for loss of value attributable to the remaining parcel when the state condemns Common Areas..

The Corporate Transparency Act

2024 has also seen the The Corporate Transparency Act (CTA) become effective, which was enacted in 2021, is ushering in a new era of transparency in entity structures and ownership, with significant implications for the real estate sector [8] While federal legislation, the CTA will apply to across the U.S. including Arizona entities.  This legislation aims to tackle money laundering, tax evasion, and other illegal activities by mandating that certain U.S. and foreign entities provide detailed identifying information to the Financial Crimes Enforcement Network (FinCEN). This includes information about the company’s beneficial owners—those individuals who ultimately hold ownership or control over the company.[8]

Effective January 1st, 2024, the CTA has cast its net wide, impacting “reporting companies” – a broad category potentially encompassing LLCs, corporations, and other entities established through official filings with the Secretary of State or similar offices [8] Additionally, foreign companies officially registered to operate in any U.S. state must also adhere to these reporting requirements. This ensures that the reach of the CTA extends beyond domestic entities, capturing a wider range of companies operating within the U.S. market [8]

Counsel should be sought to determine when deadlines apply to your entity and if your entity is subject to the reporting requirement.  

The CTA’s influence on real estate transactions is considerable, particularly in its aim to reduce anonymity within the industry. Special purpose entities (SPEs), frequently employed in real estate deals, may now fall under the CTA’s reporting requirements unless they meet specific exemption criteria. This move towards increased transparency could fundamentally change the way real estate transactions are managed and financed.[8] This necessitates continuous monitoring of changes in ownership structure to ensure compliance.[8]

It’s worth noting that the CTA has faced its share of controversy. On March 1, a federal judge in Alabama declared the CTA unconstitutional and issued an injunction preventing the government from enforcing it against the plaintiffs involved in that case. While this ruling doesn’t invalidate the CTA nationwide, it does raise questions about its future and potential legal challenges [9]. While the Act remains in effect for those not affiliated with the National Small Business Association, this ruling could be the catalyst for a broader legal battle that will ultimately determine the Act’s constitutionality. The outcome of this legal challenge may have far-reaching implications for the future of financial transparency and reporting requirements in the United States.[9]

Final Thoughts on Arizona Real Estate Laws

While the above is not a comprehensive recitation of all the 2024 Arizona real estate law changes, it is clear that Arizona has taken swift action to address the current housing affordability crisis.  These modifications aim to boost housing options, protect homeowners’ rights, and streamline development processes. From allowing Accessory Dwelling Units to mandating middle housing in certain areas, these changes reflect a push towards more diverse and affordable housing solutions. In addition, the new regulations place restrictions on HOA powers, providing homeowners with added protections.

These legal updates also demonstrate new potential reporting requirements to Arizona entity owners under the Corporate Transparency Act. Property owners and real estate professionals need to keep up with these changes to effectively manage the evolving legal landscape. As these new laws take effect, they’re likely to have a lasting impact on Arizona’s real estate market, potentially leading to more housing opportunities and a more balanced approach to property rights and development.

Experienced Arizaon Real Estate Lawyers Can Help

Staying ahead of these legal shifts is crucial for all parties involved in Arizona’s real estate transactions. Whether you’re a buyer, seller, agent, or developer, understanding and complying with these new regulations is essential for protecting your interests and ensuring a smooth transaction. That’s where experienced Arizona real estate lawyers come in.

The team at Gottlieb Law has a proven track record of guiding clients through complex legal challenges with experience and precision. We’re committed to staying up-to-date with the latest laws and regulations, ensuring you have the experienced guidance you need to make informed decisions and protect your investments.

Contact Gottlieb Law today to schedule your consultation and let us help you navigate the ever-changing world of Arizona real estate law.

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

References

[1] – https://therealdeal.com/national/phoenix/2024/05/24/new-arizona-law-overrides-local-zoning-to-spur-housing-projects/

[2] – https://tempeyimby.org/2024/05/27/arizonas-new-housing-laws-explained/

[3] – https://www.azleg.gov/legtext/56leg/2R/summary/S.2721FICO.DOCX.htm

[4] – https://independentamericancommunities.com/2024/04/17/arizonas-new-hoa-laws-for-2024/

[5] – https://www.abc15.com/news/business/new-bill-could-help-convert-old-commercial-buildings-in-phoenix

[6] – https://www.azleg.gov/legtext/56leg/2R/bills/HB2648H.pdf

[7] – https://www.azbar.org/media/epjnvc4f/real-estate-case-and-legislative-update.pdf

[8] – https://www.azcc.gov/docs/default-source/corps-files/boi-crib-sheet.pdf?sfvrsn=52c2dc91_1

[9] – https://www.thomsonreuters.com/en-us/posts/corporates/cta-unconstitutional-ruling/

 

Gottlieb Law - Arizona Real Estate Disclosure Laws

Understanding Real Estate Disclosure Laws in Arizona When Selling a Home

Understanding Real Estate Disclosure Laws in Arizona When Selling a Home 1769 1184 Gottlieb Law
Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

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.

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.