A Contract Series – Part 7a The Arizona REALTORS® Residential Resale Purchase Contract - Due Diligence Section

This is Part 7a of a series of articles discussing the major provisions in each of the sections of the Arizona REALTORS® Residential Resale Real Estate Purchase Contract (10/22) (“Contract”).  The Due Diligence Section is addressed in two sub-parts.  This article will address the buyer’s due diligence and the next article will address the Inspection Notice and Buyer Disapproval process.  The previous articles in this series can be located at Arizona Real Estate – A Professional’s Guide to Law & Practice. (arizonarealestateprofessionalguide.blogspot.com).

All homes have flaws, even those well-maintained or newly built. Conducting due diligence before closing escrow on a home is a crucial step for a buyer. The buyer’s failure to conduct their due diligence can lead to unanticipated costs or problems after close of escrow (“COE”) and ultimately lead to a dispute or claim against the seller and/or brokers in the transaction.   If the during their due diligence period the buyer discovers home defects that they would like fixed, pursuant to the Contract, the buyer has time to negotiate with the seller, who may agree to fix the defects, credit the buyer for anticipated costs, buy down the buyer’s interest rate or even lower the purchase price.

DUE DILIGENCE SECTION

This section is entitled “Due Diligence” to reflect the fact that both inspections and investigations of the home should be performed during the Inspection Period.

Inspection Period

The buyer’s inspection period is 10 days after Contract acceptance unless otherwise indicated. During the inspection period, the contract obligates the buyer to:

 

                   i.            conduct all desired physical, environmental and other types of inspections and investigations to determine the value and condition of the premises;

·         Explain to the buyer the importance of hiring a professional home inspector licensed by the Arizona State Board of Technical Registration.

·         Educate the buyer that home inspectors are generally not licensed contractors and are limited in their ability to opine on the condition of certain systems and structures. Therefore, a licensed contractor may be needed to conduct further inspections.

·         Be familiar with the scope of a home inspection.  Pursuant to R4-30-301.01(A) “...a certified home inspector shall conduct a home inspection in accordance with the “"Standards of Professional Practice" adopted by the Arizona Chapter of the American Society of Home Inspectors, Inc. on January 1, 2002…”

                ii.            make inquiries and consult government agencies, lenders, insurance agents, architects and other appropriate persons and entities concerning the suitability of the premises and the surrounding area;

              iii.            investigate applicable building, zoning, fire, health and safety codes to determine any potential hazards or defects in the premises; and

               iv.            verify any material multiple listing service (MLS) information.

The buyer is also advised to investigate the presence of sex offenders in the vicinity or the occurrence of a disease, natural death, suicide, homicide or other crime on the premises or in the vicinity, if deemed material.   

The buyer is advised to consult the Buyer Advisory provided by AAR to assist in the due diligence inspections and investigations.

·       Emphasize to the buyer the importance of using the Buyer Advisory to investigate the property as the advisory is intended to prompt the buyer to consider investigating items that the buyer may not have previously considered.

• Consider using the Buyer Advisory to investigate your own home.  This exercise will assist you in becoming more familiar with all the resources available and help you educate your buyers.

The buyer remains obligated to keep the premises free and clear of liens, indemnify and hold the seller harmless from all liability and repair all damages arising from the inspections.

The buyer is also obligated to provide the seller and broker(s), at no cost, copies of all inspection reports concerning the premises upon receipt. 

Square Footage

The buyer is advised that any reference to square footage is approximate and must be investigated during the inspection period if material. The Contract states:

“BUYER IS AWARE THAT ANY REFERENCE TO THE SQUARE FOOTAGE OF THE PREMISES, BOTH THE REAL PROPERTY (LAND) AND IMPROVEMENTS THEREON, IS APPROXIMATE. IF SQUARE FOOTAGE IS A MATERIAL MATTER TO THE BUYER, IT MUST BE VERIFIED DURING THE INSPECTION PERIOD.”

·       This language should bar a buyer’s claim for misrepresentation as to the square footage of the property.

• The subsection places squarely on the buyer the burden of verifying the square footage, which can be done by an appraiser or architect.   

Wood-destroying Organism or Insect Inspection

If current or past wood-destroying organisms or insects (such as termites) are a material matter, the buyer must investigate the issue during the inspection period at buyer’s expense. If the lender requires an updated Wood-destroying Insect Inspection Report prior to COE, it will also be performed at buyer’s expense.

 ·         If wood infestation is found during the updated inspection and the lender requires it to be treated before approving the buyer’s loan, the buyer and seller will be required to negotiate whether the treatment will be performed and, if so, at whose expense.

 ·         If the treatment is not performed and the lender will not approve the buyer’s loan, the unfulfilled loan contingency provisions will apply.

 ·         The Arizona Department of Agriculture has guidance on termites for both homeowners and real estate professionals. 

 Flood Hazard

The buyer is obligated to determine flood hazard designations or the cost of flood hazard insurance during the inspection period. The buyer is advised that if the home is in a special flood hazard area, the lender may require the purchase of flood hazard insurance and it may also affect the ability to encumber or improve the premises.

 ·         The Federal Emergency Management Agency (FEMA) maps flood hazard zones and these maps are used to determine flood insurance rates.  A buyer can enter the property address at the  FEMA Flood Map Service Center to investigate whether the property is in a flood hazard zone. 

 Insurance

If homeowner’s insurance is material, the buyer is obligated to apply for and obtain written confirmation of the availability and cost of homeowner’s insurance during the Inspection Period. The buyer is advised that any desired insurance should be in place at COE.

 Sewer or On-site Wastewater Treatment System

This paragraph indicates whether the premises is connected to a sewer system, conventional septic system, or alternative system and must be initialed in every transaction. It is important to mote that the premises may be served by more than one of these systems and, if that is the case, it should be documented by the seller in the SPDS. 

 If a sewer connection is a material matter to the buyer, it must be investigated during the inspection period.

If the premises are served by a conventional septic or alternative system, the AAR On-Site_Wastewater_Treatment_Facility_Addendum should be completed and is incorporated into the Contract.

 ·         This addendum addresses the required pre-transfer inspection, conventional septic system pumping, documents that the Contract requires the seller to provide to the buyer, repair costs, buyer disapproval, the required notice of transfer form, transfer fees and any additional terms. 

  ·         Pursuant to Arizona Department of Environmental Quality (“ADEQ”) Rule, all on-site wastewater treatment systems must be inspected prior to transfer. A.A.C. R18-9-A316 requires that within six months before COE, the seller must retain a qualified inspector to perform a transfer of ownership inspection of the on-site wastewater treatment facility. See On-site Inspection and Transfer (azdeq.gov)  for the ADEQ Instructions For Preparing A Report of Inspection for more information. 

 Swimming Pool Barrier Regulations

During the Inspection Period, the buyer agrees to investigate all applicable state, county and municipal swimming pool barrier regulations and agrees to comply with and pay all costs of compliance prior to occupying the premises unless otherwise agreed. If the home contains a swimming pool, the buyer acknowledges receipt of the Arizona Department of Health Services approved private pool safety notice, which can be found at residential-pool-safety-notice.pdf (azdhs.gov).

 ·         A list of many of the political subdivisions in the state with pool barrier laws can be found at Pool Barrier Laws & Information | Arizona Association of REALTORS® (aaronline.com).

 ·         Because of the importance of educating all buyers about pool safety, the buyer should initial this paragraph in every transaction, whether or not there is currently a pool on the premises.

 Buyer Acknowledgment

The buyer recognizes, acknowledges, and agrees that the broker(s) is not qualified, nor licensed, to conduct due diligence with respect to the premises or the surrounding area.  The buyer is instructed to consult with qualified licensed professionals to assist in the buyer’s due diligence efforts. Because conducting due diligence with respect to the premises and the sur­rounding area is beyond the scope of the broker’s expertise and licensing, the buyer releases and holds harmless broker(s) from liability for any defects or conditions that could have been discovered by inspection or investigation.

·         This provision should be initialed in every transaction. 

 ·         However, keep in mind that The Arizona Department of Real Estate (ADRE) Commissioner’s Rule A.A.C R4-28-1101(I) requires that a real estate agent take reasonable steps to assist a client in verifying the accuracy of information relevant to the transaction.. The rule also requires reasonable care in obtaining information material to a client’s interests and relevant to the transaction and that an agent accurately communicates this information to the client.  See:  Applying “Trust but Verify” in a Real Estate Transaction.  

Home Warranty Plan

The buyer and seller are advised to investigate the various home warranty plans and acknowledge that different home warranty plans have different coverage options, exclusions, limitations and service fees. Also, most plans exclude preexisting conditions. If a home warranty plan is to be purchased, the Contract specifies who is responsible for ordering it, with what options, from what company, and at a cost not to exceed a specified amount.  If the buyer declines the purchase of a home warranty plan, the buyer’s election should be indicated.  In either case, the buyer’s initials are required by this section. 

 Walkthrough(s)

The seller grants the buyer and buyer’s inspector(s) reasonable access to conduct walkthrough(s) of the premises for the purpose of satisfying the buyer that any agreed upon corrections or repairs have been completed, and that the premises are in substantially the same condition as of the date of contract acceptance. If the buyer does not conduct the allowed walkthrough(s), the buyer releases the seller and broker(s) from liability for any defects that could have been discovered. 

·       The walkthrough provision recognizes that more than one walkthrough may be required, i.e., the buyer may desire a walkthrough three days prior to COE to confirm agreed upon repairs have been completed.

 ·         A buyer should conduct their pre-closing walkthrough at least three days prior to the scheduled date for close of escrow and utilize the  Buyer Pre-Closing Walkthrough form.

 Seller’s Responsibility Regarding Inspections and Walkthrough(s)

The seller is obligated to make the premises available for all inspections and walkthrough(s) upon reasonable notice by the buyer. The seller is also obligated to have all utilities on, including any propane, until COE to enable the buyer to conduct these inspections and walkthrough(s).

 ·         If the seller fails to make the premises available for inspections or walkthroughs, or fails to have all utilities on, the buyer should issue the seller a cure notice pursuant to Section 7a.  If cured by the seller, the parties should then execute a written agreement to extend the buyer’s inspection or walkthrough for the length of time of the delay caused by the potential breach. 

 IRS & FIRPTA Reporting (Foreign Sellers)

The Foreign Investment in Real Property Tax Act (‘FIRPTA) provides that if a seller is a Foreign Person, the buyer must withhold federal income taxes up to 15% of the purchase price unless an exception applies.  If FIRPTA is applicable and the buyer fails to withhold the tax, the buyer may be held liable for the tax. The buyer agrees to perform any acts reasonable or necessary to comply with FIRPTA and IRS reporting requirements and the buyer is responsible for obtaining independent legal and tax advice. 

 ·         For more information regarding FIRPTA, see FIRPTA Withholding | Internal Revenue Service (irs.gov)

 Next Article – Due Diligence:  Inspection Notice and Buyer Disapproval

K. Michelle Lind, Esq. is an attorney who currently serves Of Counsel to the Arizona REALTORS®.  She is also the author of the book - Arizona Real Estate: A Professional's Guide to Law and Practice (3rd Ed.) . 

For more real estate related articles, visit Michelle’s Blog at Arizona Real Estate – A Professional’s Guide to Law & Practice. (arizonarealestateprofessionalguide.blogspot.com)

This article is of a general nature and may not be updated or revised for accuracy as statutory or case law changes following the date of first publication. Further, this article reflects only the opinion of the author, is not intended as definitive legal advice and you should not act upon it without seeking independent legal counsel.  4/13/23

A Contract Series – Part 6 The Arizona REALTORS® Residential Resale Purchase Contract - Warranties

 

This is Part 6 of a series of articles discussing the major provisions in each of the sections of the Arizona Association of REALTORS® (“AAR”) Residential Resale Real Estate Purchase Contract (10/22) (“Contract”).  The previous articles in this series can be located at Arizona Real Estate – A Professional’s Guide to Law & Practice. (arizonarealestateprofessionalguide.blogspot.com)

A warranty is a contractual assurance given by one party to the other.  A warranty is a term of the contract but not a condition of the contract - it is a promise.  A warranty entitles the non-breaching party to damages if the warranty is breached. 

 WARRANTIES SECTION

 Condition of Premises

Buyer and Seller agree the premises are being sold in its present physical condition as of the date of contract acceptance.

• In other words, the Contract states that the premises is being sold “as is.” (However, this does not preclude the buyer from asking the seller to repair disapproved items during the Inspection Period or as provided in the Contract.)
• Explain to the seller that “as is” does not mean that the seller can conceal defects in the property – the seller is still obligated to disclose all known material defects.

The seller does not warrant the condition, zoning or fitness for any particular use or purpose of the premises.

 ·         The seller does not warrant the condition of the premises (there may be items not working), zoning (that restricts how a property can be used, what can be built upon it and where structures can be built), or fitness for a particular use or purpose (that the buyer is not relying on the seller about how the property can be utilized).

However, the seller is obligated to maintain and repair the premises so that the premises is in the following condition at the earlier of possession or close of escrow (“COE”).

 

·                     All personal property not included in the sale and all debris will be removed from the premises.

 

§  Prepare the seller to remove all their personal property and trash from the premises by the time that the deed is recorded on the COE date. 

 

·                     The premises, including all additional existing personal property included in the sale, will be in substantially the same condition as on the date of contract acceptance.

 

§  Since the seller is selling the premises (which includes the fixtures and personal property included in the Contract) in its present condition as of the date of contract, the parties should document its present condition.  Documentation of the condition of the premises at time of Contract acceptance can prevent COE disputes and can be done by:

 

§  the seller documenting the condition in the SPDS, for example if the refrigerator or ice maker doesn’t work, note that in the SPDS;

 

§  either party documenting the condition in photos or other written descriptions at the time of Contract acceptance.

 

·                     All agreed upon repairs/improvements will be addressed pursuant to the Buyer Disapproval provisions in Section 6j.

 

§  Ensure that the seller understands that all agreed upon repairs/improvements must be in a workmanlike manner (of good and acceptable quality) and must be done by a licensed contractor if the repairs cost $1,000+, are not of a casual or minor nature, or require a building permit pursuant to A.R.S. §32-1121.  

The buyer is again advised to conduct independent inspections and investigations regarding the premises within the inspection period. The buyer and seller also acknowledge they may, but are not obligated to, negotiate for repairs/improvements to the premises.

 Warranties that Survive Closing

Warranties that survive close of escrow are promises that the seller makes that can be enforced by the buyer after COE.  The seller warranties that survive COE are the following. 

 

·                     That the seller has disclosed all material defects and any information, excluding opinions of value, which materially and adversely affect the consideration to be paid by the buyer.

 

o   This is the law – with or without the express warranty that survives COE. 

 

·                     That the seller has made payment in full for all labor, professional services, materials, machinery, fixtures, or tools furnished within the 150 days immediately preceding the COE in connection with the construction, alteration, or repair of any structure on or improvement to the premises.

 

o   This warranty is to avoid any subsequent mechanics liens being recorded against the property.

 

o   If contractors or suppliers do not get paid on a construction project, they can file a mechanics lien to secure payment.  Generally, a mechanics lien must be filed within 120 days of completion of a project, after a preliminary 20-day notice.  A.R.S. 33-981 et. seq.  

 

·                     That the information provided by the seller regarding connection to a sewer system or on-site wastewater treatment facility is correct to the best of seller’s knowledge. 

 

o   Since a sewer system or on-site wastewater treatment facility connection is a seller warranty that survives COE (to the best of seller’s knowledge), if there is any doubt the seller should verify the connection by employing a plumber, home inspector or other professional. 

 

o   If the home is not connected to a public sewer, it is generally served by an on-site wastewater treatment facility (conventional septic or alternative system).

 

§  If the property is served by a conventional septic or alternative system, use the  On-Site Wastewater Treatment Facility Addendum.   

 

§  A qualified inspector must inspect a conventional septic or alternative system within six months prior to transfer of ownership.

 Buyer Warranties

The buyer warrants that the buyer has disclosed any information that may materially and adversely affect the buyer’s ability to close escrow and that the buyer has conducted all desired independent inspections and investigations and accepts the premises at the earlier of possession of the premises or COE.

 

·                     The buyer’s obligation to disclose any known information that the buyer is or may be unable to perform is the law - with or without this express warranty.

The buyer also warrants that the buyer is not relying on any verbal representations concerning the premises except as disclosed on the line in this subsection.

 

• The buyer should never be relying on any verbal representations.  Allegations of verbal representations are common in many disputes and lawsuits. 

 

• The fact that the buyer is not relying on any verbal representations is confirmed by writing “none” on lines 211-212 under the buyer’s warranties provisions.  If the buyer indicates that they are relying on a verbal representation when writing an offer – stop – and assist the buyer in confirming the representation in writing before completing the offer if at all possible.  If not, consult your broker or manager and make sure that the representation is confirmed in writing during the inspection period. 

Conclusion

The warranties in the Contract are basic promises, but important ones.  If either the buyer or seller breaks one of these warranted promises, they could be liable to the other party for damages. 

 Next Article – Due Diligence Section

K. Michelle Lind, Esq. is an attorney who currently serves Of Counsel to the Arizona REALTORS®.  She is also the author of the book - Arizona Real Estate: A Professional's Guide to Law and Practice (3rd Ed.) . 

For more real estate related articles, visit Michelle’s Blog at Arizona Real Estate – A Professional’s Guide to Law & Practice. (arizonarealestateprofessionalguide.blogspot.com)

This article is of a general nature and may not be updated or revised for accuracy as statutory or case law changes following the date of first publication. Further, this article reflects only the opinion of the author, is not intended as definitive legal advice and you should not act upon it without seeking independent legal counsel.  4/12/23

 

A Contract Series – Part 5 The Arizona REALTORS® Residential Resale Purchase Contract - Disclosure

 

This is Part 5 of a series of articles discussing the major provisions in each of the sections of the Arizona Association of REALTORS® (“AAR”) Residential Resale Real Estate Purchase Contract (10/22) (“Contract”).  The previous articles in this series can be located at Arizona Real Estate – A Professional’s Guide to Law & Practice. (arizonarealestateprofessionalguide.blogspot.com)

A seller has a duty to disclose known facts materially affecting the value of the property that are not readily observable and are not known to the buyer. This duty was set forth by the Arizona Court of Appeals in Hill v. Jones, 151 Ariz. 81, 725 P.2d 1115 (App. 1986). In addition, there are an ever-increasing number of specific statutory disclosures that sellers are required to make to a buyer.  The disclosure section of the Contract is drafted to address these disclosures. 

 DISCLOSURE SECTION

 Seller’s Property Disclosure Statement (SPDS)

The AAR SPDS form is specifically required by the Contract, and the seller is obligated to deliver a completed AAR SPDS form to the buyer within three days after contract acceptance. The issue of late delivery of the SPDS is addressed in that the buyer has the inspection period or five days after receipt of the SPDS, whichever is later, in which to provide notice of items disapproved.

 ·      The SPDS was recently revised effective February 2023, review the redlined 2/23 SPDS for all the changes. 

 ·         The seller is now able to complete the SPDS online by using AAR’s new digital disclosure member benefit called Breeze .  Once the seller has completed the form on Breeze, it will be “locked” and any changes or updates should be made on the AAR Notice/Disclosure Form.

 o   For free training and information about setting up a Breeze account go to: Breeze Disclosures | Arizona Association of REALTORS® (aaronline.com)

 ·         Consider completing a SPDS form on your own home, which will help you understand how the form is completed from the seller’s perspective and anticipate any questions a seller may have. 

 ·         Give the seller a copy of the SPDS at the time of listing or shortly thereafter to allow them time to review the form and start gathering all of the requested information.

·         Use the SPDS cover page to discuss the importance of the SPDS with the seller and make sure that they understand their legal obligations. 

• The SPDS is designed to assist the seller in making the legally required disclosures and avoid inadvertent nondisclosures of material facts.

·         ·         The SPDS also assists the buyer in the inspection and investigation of the property.

The proper use of the SPDS results in well informed buyers and reduces the likelihood of claims against the sellers and brokers involved in the transaction.

Insurance Claims History

The seller is obligated by the Contract to deliver a written five-year insurance claims history regarding the premises (or a claims history for the length of time the seller has owned the premises if less than five years) from the seller’s insurance company, an insurance support organization (such as the Comprehensive Loss Underwriting Exchange or C.L.U.E.), a consumer reporting agency, or if unavailable from these sources (for example, if the property is a second home), from the seller, within five days after contract acceptance. The buyer has the inspection period or five days after receipt of the claims history, whichever is later, to provide notice of items disapproved.

 ·         Insurance companies use the claims history as a rating factor in determining the cost of homeowner’s insurance.

 ·         The claims history also assists in disclosures and investigations regarding the property history.   

 Foreign Sellers (FIRPTA)

Pursuant to the Contract, the seller agrees to comply with IRS reporting requirements. If applicable, seller agrees to complete, sign and deliver to the escrow company a certificate indicating whether the seller is a foreign person or a nonresident alien pursuant to the Foreign Investment in Real Property Tax Act (FIRPTA). The seller is advised that if the seller is a foreign person, the buyer must withhold a tax up to 15% of the purchase price, unless an exemption applies.

 ·         The FIRPTA withholding is to ensure that the seller pays U.S. taxes on any taxable gains.

 ·         A resident alien is not considered a foreign person under FIRPTA. 

 ·         There are numerous exemptions to the FIRPTA withholding requirements.

 

o   The most common exemption is when the seller furnishes a non-foreign affidavit stating under penalty of perjury that the seller is not a foreign person.

 

o   Another exemption is a transaction involving the transfer of a property acquired for use as the buyer’s residence and the amount realized (purchase price) does not exceed $300,000.

 

o   Under certain circumstances, a seller may obtain a “qualifying statement” from the IRS stating that no withholding is required.

 

·         Although FIRPTA generally provides that up to 15% of the purchase price must be withheld, the amount withheld should not exceed the seller’s maximum tax liability. The seller (or buyer) can request the IRS to determine the seller’s maximum tax liability with respect to the sale. 

 

·         A broker for either party can be held liable for the tax that should have been withheld (up to the amount of compensation received), if the broker had actual knowledge that the non-foreign affidavit is false and fails to notify the buyer and seller.  Under certain circumstances, the broker may also be liable for civil or criminal penalties.

 

Any necessary withholding should be accomplished by requiring the escrow agent to withhold the required funds. The escrow company should be instructed to send the funds to the IRS at close of escrow (“COE”).

 Lead-based Paint Disclosure

If the premises were constructed prior to 1978, the lead-based paint (“LBP”) information must be provided, preferably prior to contract acceptance. The buyer is obligated to return a signed copy of the Disclosure of Information on Lead-based Paint and Lead-based Paint Hazards to the seller prior to COE. The buyer must initial this subsection on the appropriate line in every transaction. The buyer is further advised to use certified contractors to perform renovation, repair or painting projects that disturb LBP in residential properties built before 1978 and to follow specific work practices to prevent lead contamination.  

·      ·          Federal law and subsequent rules and regulations require that before a buyer (or tenant) is obligated under any contract to purchase a home constructed prior to 1978, the seller must:

o   Provide the EPA-approved lead hazard pamphlet, Protect Your Family From Lead in Your Home.

o   Disclose any known information regarding lead-based paint hazards to buyers and brokers.

o   Disclose and provide any available lead-based paint records or reports to buyers.

o   Permit a 10-day opportunity (or other agreed upon time period) to conduct a lead-based paint risk assessment or inspection, unless waived by the buyer.

·        ·         Every contract to sell target housing must contain (or provide as an attachment) the information contained in the AAR Disclosure of Information on Lead-based Paint and Lead-based paint Hazards (sales) form.

 Affidavit of Disclosure

If the premises are located in an unincorporated area of the county, and five or fewer parcels of property other than subdivided property are being transferred, the seller must deliver a completed Affidavit of Disclosure in the form required by law to the buyer within five days after contract acceptance. The buyer must provide notice of any Affidavit of Disclosure items disapproved within the inspection period or five days after receipt of the Affidavit of Disclosure, whichever is later. The buyer should deliver the affidavit to the escrow company so that it can be recorded at COE. 

 ·         By statute, a seller of five or fewer parcels of land (both vacant land and properties with homes or other improvements), other than subdivided land, in an unincorporated area of a county and any subsequent seller of such a parcel is required to furnish a written Affidavit of Disclosure to the buyer at least seven days before the transfer of the property.

 ·         The buyer is obligated to acknowledge receipt of the Affidavit of Disclosure.

 ·         The buyer has the right to rescind the sales transaction for a period of five days after receipt of the Affidavit of Disclosure.

 ·         The executed Affidavit of Disclosure must be recorded at the same time that the deed is recorded.

Changes During Escrow

The seller agrees to immediately notify the buyer of any changes in any of the seller’s disclosures. Unless the seller is already obligated to correct or repair the changed item, the buyer has five days to provide notice of disapproval.

 ·         The seller’s notification of changes should be made on the AAR Notice/Disclosure Form.

Conclusion

Failure to disclose, and associated misrepresentation claims generally make up most real estate disputes. Many lawsuits against home sellers and brokers are brought by buyers alleging the failure to disclose a material defect in the property. The proper use of the Contract and SPDS can reduce the likelihood of nondisclosure disputes and claims. 

 Next Article – Warranties Section

K. Michelle Lind, Esq. is an attorney who currently serves Of Counsel to the Arizona REALTORS®.  She is also the author of the book - Arizona Real Estate: A Professional's Guide to Law and Practice (3rd Ed.)   

 For more real estate related articles, visit Michelle’s Blog at Arizona Real Estate – A Professional’s Guide to Law & Practice. (arizonarealestateprofessionalguide.blogspot.com)

 This article is of a general nature and may not be updated or revised for accuracy as statutory or case law changes following the date of first publication. Further, this article reflects only the opinion of the author, is not intended as definitive legal advice and you should not act upon it without seeking independent legal counsel. 4/6/23