Applying “Trust but Verify” in a Real Estate Transaction

 

“Trust but verify” is a Russian proverb made famous by former US President Ronald Reagan. In a typical real estate transaction, a great deal of information is exchanged.  When should a party “trust” and when should a party “verify”?   

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.

 

The related ADRE Substantive Policy Statement (SPS) SPS 2005.13 clarifies the Commissioner’s Rule and states that an agent is expected to take reasonable steps to assist their client in verifying information when a reasonably prudent real estate professional has reason to question the accuracy of the information being provided, or where the client has questioned the accuracy of the information.   

 

Thus, the ADRE Commissioner’s Rule and SPS provide guidance on when a real estate agent should assist their client in verifying information.  For example, if the seller states that the roof is in excellent condition and only a roof inspector would have the expertise to determine otherwise, the broker should have no liability for merely passing along the seller’s representation.
 

However, if the seller states the roof is new and in excellent condition, but the agent has reason to believe that the roof is old and in a state of disrepair, evidenced by broken shingles and obvious water leaks, the agent should point out these circumstances to the buyer and recommend that the buyer obtain a professional roof inspection to verify the roof condition.

 

Similarly, if the buyer questions the accuracy of the seller’s representations or other information provided during the transaction, the same rule applies: the agent should assist the buyer in obtaining independent verification.  In other words, if the buyer asks about the roof’s condition, the agent should advise the buyer to have the roof inspected by a roofing expert to verify its condition.

Further, a listing agent can “trust” information provided by the seller, absent a “red flag” indicating the information is inaccurate.  The court made this clear in Aranki v. RKP Investments, Inc.,194 Ariz. 206, 979 P.2d 534 (App. 1999) when it held that the listing agent was not liable to the buyers for passing along information from the seller without proof that the listing broker knew or should have known that the information might be false. The listing broker had no duty to the buyer to verify the information provided by the seller because there was no indication that the information might be inaccurate.   

 

In conclusion, “trust” - but verify if there is any question or doubt.  You can “trust” information provided in a transaction if there are no “red flags,” but you must assist your client to “verify” information if you have any reason to doubt its accuracy or if the client has questions about the information.  In addition to referring the buyer to other professionals to verify information, provide the buyer with the resources such as the Buyer Advisory, so that the buyer can take an active role in the verification of information provided about the property being purchased.

 

 

Michelle Lind is Of Counsel to the Arizona REALTORS® and the author of Arizona Real Estate: A Professional’s Guide to Law and Practice.  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.  8/25/22

 

Real Estate Tales from the Courtroom: The Designated Broker’s Initials

Does the Designated Broker’s Failure to Initial the Listing Agreement Prevent a Commission Claim?

The sellers owned a house in Chandler and signed a listing agreement with the listing agent to sell the house. When the house sold, the sellers refused to pay the $89,700.00 commission because the listing agent’s broker did not review and initial the listing agreement within ten business days as required by statute ARS 32-2151.01.G.   As might be expected, the agent filed a lawsuit against the sellers for the unpaid commission.    

As discussed in the article about the case of Young v. Rose, a court ruled that a real estate agent who does not sign a buyer’s broker employment or listing agreement may not sue to collect a commission under that agreement due to ARS 32-2151.02.  

However, this case addresses a different issue: whether an agent can sue to collect a commission under a listing agreement signed by the agent, but not initialed by the designated broker within ten business days after it was signed by the parties.  The court in this case decided that the agent was entitled to pursue the claim. 

The court stated that a designated broker's failure to initial the listing agreement within ten business days of the parties signing it as required by subsection ARS 32-2151.01.G “poses no impediment to a civil action for unpaid commissions.”  The statute requires a “licensed employing broker” to keep certain records and to exercise specified controls over the broker's trust fund account.  But the statute does not address an agent’s right to recover a commission. 

Of course, the Arizona Department of Real Estate (ADRE) may sanction a broker who fails to initial the listing agreement within ten days as required by statute.  But ARS 32-2151.01.G has a different purpose than ARS 32-2151.02. The statute requiring the broker’s initials (ARS 32-2151.01.G) is regulatory in nature and exposes the broker to sanctions by ADRE, but the statute does not affect the validity and enforceability of the listing agreement itself.

Therefore, the Court found that a designated broker’s failure to initial a listing agreement within ten business days of the parties signing it as required by statute posed no barrier to the agent’s lawsuit for the unpaid commissions. As a result, the listing agent was entitled to her commission under the listing agreement.

CK Family Irrevocable v. My Home, et al., 249 Ariz. 506

 

Michelle Lind is Of Counsel to the Arizona REALTORS® and the author of Arizona Real Estate: A Professional’s Guide to Law and Practice.  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.  8/2/22

Real Estate Tales from the Courtroom: The Buyers’ Broker’s Signature

 

The buyers signed the Buyer-Broker Employment Agreement.  Did the buyer’s agent?

Over an 18–month period the buyers and buyer’s agent entered into three Buyer–Broker Employment Agreements for a property with a desired purchase price of under four million dollars.

After the third Buyer-Broker Employment Agreement expired, the buyer’s agent sent an e-mail message to the buyer regarding four properties and asked the buyers to sign a new Buyer–Broker Employment Agreement.  The buyers signed the Agreement and sent it back to the buyer’s agent, who responded “thank you” with an email that ended with an electronic business card consisting of her name, business address, e-mail address, telephone numbers, website address, and photograph.

During the term of this forth Buyer–Broker Employment Agreement, the buyers purchased a home using another real estate agent and paid that agent a commission. The buyer’s agent sued the buyers for the commission set forth in the Buyer-Broker Employment Agreement.

The buyers argued there was no enforceable agreement because neither the buyer’s agent nor the agent’s broker had signed the Buyer-Broker Employment Agreement, as required by A.R.S. 32-2151.02(a)(4) . The buyer’s agent argued that A.R.S. §32–2151.02 is an Arizona Department of real Estate “regulatory statute” that did not bar this civil cause of action for the commission and that the buyers’ signatures on the Buyer-Broker Employment Agreement satisfied the Statute of Frauds. A.R.S. 44-101.

The buyer’s agent also claimed she had in fact signed the Buyer-Broker Employment Agreement by virtue of the thank you e-mail, which was “intended to be [her] signature and acceptance of the contract” pursuant to the Arizona Electronic Transactions Act. See A.R.S. 44-7001-7052.

The Court stated that the buyer’s agent was required to sign the Buyer-Broker Employment Agreement for it to be enforceable.  Further litigation ensued regarding whether the buyer’s agent’s electronic thank you email qualified as her signature. 

The ultimate outcome of the case is unknown to this author, but the lesson is clear.  To avoid this type of costly and time-consuming litigation, make sure and obtain all necessary signatures on all documents – including your own. 

Young v. Rose, 230 Ariz. 433

Michelle Lind is Of Counsel to the Arizona REALTORS® and the author of Arizona Real Estate: A Professional’s Guide to Law and Practice.  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.  7/28/22

The Risky Facts of Real Estate Life – Pre and Post Possession Agreements

 Buyers and sellers who want to enter into pre-possession and post possession agreements are a risky fact of real estate life.  There are times when a buyer wants to move into the property before close of escrow (pre-possession) or the seller wants to stay in the property following close of escrow (post possession).  

 

The first thing that a real estate agent absolutely needs to know and follow is their broker’s policy on these types of agreements.  Also, be aware that the Arizona Department of Real Estate Commissioner’s Rule requires that a salesperson or broker recommend “that the client seek appropriate counsel from insurance, legal, tax, and accounting professionals regarding the risks of pre-possession or post possession of a property” – and this recommendation should be done in writing. 

 

So why are these agreements risky?  They are risky because in both pre and post possession agreements, the people occupying the property are not the owners, which sounds a lot like a rental.  If the Arizona Residential Landlord Tenant Act applies (and there is a strong argument that it does) there are statutory rights and obligations applicable to these agreements.  As a result, the risk of a dispute increases, especially if all the parties’ rights and obligations are not addressed in a well-drafted written agreement. 

 

Post Possession by the Seller

Because the obligations in the purchase contract are fulfilled at close of escrow, the obligations to repair and maintain the property are no longer the seller’s responsibility; they are the buyer’s responsibility – but the seller is still occupying the property.  Therefore, post possession issues include:

 

·         Who is responsible for repairs?

·         What if there is a fire, monsoon or other damage?  Do the parties have the appropriate insurance policies (homeowners’/rental) in place and whose insurance policy will cover any damage? 

• Will a security deposit be required in case the seller damages anything in the property? If so, how much?  (The amount of a security deposit in a rental is limited to 1.5 times the amount of one month’s rent).

And other matters to be addressed are:

• How much is payment/rent? Will the payment/rent be prorated?

• Who pays the utility bills? Will the utilities be transferred into the buyers’ name?

• Who will occupy the property? Are pets allowed? Is smoking permitted?

 

Information about these and other issues are discussed in the Post Possession Agreement Checklist here:  https://www.aaronline.com/wp-content/uploads/2015/12/Post-possession-checklist-11-19-15.pdf

 

Pre-possession by the Buyer

Typically, the seller is responsible for any damage to the property prior to close of escrow.  However, in the event a buyer prepossesses the property, the buyer is now responsible. 

The same issues as discussed above regarding post possession agreements apply to pre-possessions.  But there are additional pre-possession risks, such as: 

 

• What if there are buyer contingencies that have not been met prior to the buyer’s pre-possession? Have the parties decided to waive the contingencies or are they still in place allowing the buyer to cancel the purchase contract if a contingency fails?

• What if the buyer moves in and begins to remodel the property, then thereafter either cannot or will not close escrow? 
• If the sale is not completed, when does the buyer have to move out? What happens if the buyer refuses to move out?

 

Information about these and other issues are discussed in the Pre-Possession Agreement Checklist here:  https://www.aaronline.com/wp-content/uploads/2015/12/Pre-possession-checklist-11-19-15.pdf

 

A written agreement and decision of which type of agreement is appropriate should be addressed regardless of whether a pre or post possession is for 3 days or 30 days or more. The Arizona REALTORS® has some additional resources to assist:

 

·         A sample Arizona REALTORS® Residential Lease Agreement at:  https://www.aaronline.com/wp-content/uploads/2022/02/04/Residential_Lease_Agreement_October_201-9-SAMPLE.pdf 

·         A sample Post Possession Agreement (not an Arizona REALTORS® form) at:  https://www.aaronline.com/wp-content/uploads/2021/05/03/Post-Possession-Agreement-SAMPLE.pdf

·         A sample Pre-Possession Agreement (not an Arizona REALTORS® form) at:  https://www.aaronline.com/wp-content/uploads/2021/05/03/Pre-Possession-SAMPLE.pdf

 

Due to the risk and liability involved with pre-possession and post possession of a property, the best practice is for the parties to not enter into such an agreement. However, if the parties insist, the real estate agent should consult with their broker and advise the parties in writing to seek appropriate counsel from insurance, legal, tax, and accounting professionals regarding the risks.

 

 

Michelle Lind is Of Counsel to the Arizona REALTORS® and the author of Arizona Real Estate: A Professional’s Guide to Law and Practice.  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. 

Representing a Buyer in a New Home Subdivision

 

Representing a buyer who is purchasing a home in a new home subdivision involves different considerations than representing a buyer in a resale home transaction.  A new home purchase transaction is generally much different than a resale transaction, but the role of a buyer’s agent is just as important. 

 

Ensure that the Buyer Understands that You Should Accompany Them to Their First Visit to any Model Home or New Home Sales Office

Generally, a buyer’s agent must accompany the buyer on their first visit to a new home subdivision and register to be eligible to receive a commission. As a buyer’s agent, if you do not accompany the buyer on the first visit to any property, including a model home, new home/lot or “open house” the builder, seller or seller’s broker may refuse to compensate you.  Consider using the Arizona REALTORS® Buyer-Broker Exclusive Employment Agreement, which confirms the buyer’s agreement not to make a first new home visit without you.  https://www.aaronline.com/wp-content/uploads/2021/01/12/Buyer-Broker-Exclusive-Agreement-BBEEA-SAMPLE-FEB-2021-1.pdf

 

The Buyer Should Always Read the Public Report Before Signing the Purchase Contract

A subdivider (anyone who offers six or more lots for sale in a subdivision) must give a prospective new home buyer a copy of the Public Report and an opportunity to read and review it before the prospective buyer signs a contract to purchase a home in the subdivision. A.R.S. §32-2183(A).   Encourage your buyer client to read the Public Report thoroughly before signing a purchase contract because the report contains important information, such as:

• disclosure of conditions or provisions that may limit the use or occupancy of the home;
• homeowners association information;
• whether the subdivision is subject to any known flooding or drainage problems;
• existing and proposed adjacent land use, including any unusual safety factors and uses that may cause a nuisance or adversely affect homeowners;
• street and road maintenance;
• available utilities;
• any environmental factors;
• whether any portion of the subdivision is located in territory in the vicinity of a military or public airport;
• locations and availability of schools, shopping facilities, public transportation, medical facilities, ambulance service, and police service.

 

The purpose of the law requiring a Public Report for subdivided lands “is to insure that consumers who purchase lots in residential developments are provided with adequate streets, utilities, drainage, and generally pleasant, healthy and livable surroundings.” Alaface v. National Investment Co., 181 Ariz. 586, 596, 892 P.2d 1375, 1385 (App. 1994).

 

The Buyer Should Always Read the CC&Rs and Other Homeowners Association Rules Before Signing the Purchase Contract

Most new homes are in a homeowner’s association. Covenants, Conditions and Restrictions (CC&Rs) generally empower a homeowner’s association to control certain aspects of home’s use. The CC&Rs may be very strict, especially those addressing landscaping, RV parking, and play equipment. It is essential that the buyer review and agree to these restrictions prior to entering a contract; afterwards is generally too late. In addition to the CC&Rs, a homeowner’s association may be governed by articles of incorporation, bylaws, rules and regulations, and often architectural control standards, which should also be reviewed.

 

The Buyer Should Always Read the Purchase Contract Before Signing

Each new home seller/builder/subdivider generally has its own purchase contract, so there is no “standard” contract as there is in the resale market. And these new home purchase contracts are generally much different than the Arizona REALTORS® Resale contract. Therefore, buyers must read the purchase contract carefully before signing and be advised to keep the following questions in mind: 

 

• Who will hold the earnest money and other advance deposits? If possible, all earnest money and other advance deposits should be held by the escrow company.  If the deposits are held by the seller, the buyer may have a difficult time recovering those funds in the event the seller fails to perform.

 

• Does the contract contain a financing contingency for the benefit of the buyer?  Unless the buyer plans to pay cash, the contract should contain a financing contingency stating that the contract is contingent upon the buyer qualifying for a loan. If the buyer is unable to qualify for a loan to buy the home, the buyer should be entitled to a return of the earnest money. Some new home contracts provide only that the seller has the right to cancel the contract if the buyer fails to qualify for a loan, which does not protect the buyer.

 

• If the home is still under construction, when will the home be completed? The seller should be asked to include a realistic estimate as to when construction will be completed in the contract. A realistic completion date is important so that the quality of the construction will not be compromised by a contractor who is rushing to complete the home. If the completion date is critical, the buyer may be able to negotiate a contract provision in which the seller agrees to pay a certain dollar amount to the buyer per day for late completion.

 

• What are the buyer’s remedies if there is a problem? The remedies for problems are likely specifically set forth in the contract. The contract may require that any disputes be resolved by binding arbitration, which may eliminate the right to a trial by judge or jury and the right to appeal.   

 

Remember, educate the buyer about the importance of a buyer’s agent when purchasing a new home to guide them through the process and advocate on their behalf.  And, remind the buyer that the subdivision sales agent represents the seller and, as nice as they may be, is looking out for the seller’s best interests – not the buyer’s. 

 

Michelle Lind is Of Counsel to the Arizona REALTORS® and the author of Arizona Real Estate: A Professional’s Guide to Law and Practice.  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.  

 

They Breached the AAR Purchase Contract – Now What?

 Most real estate transactions are completed without dispute. However, there are times when a buyer or seller refuses to comply with the contract and perform a contractual duty, such as a refusal to close escrow or to make agreed upon repairs.  Although you cannot give legal advice (unless you are also an attorney), it is important to know the options so you can point your client in the right direction. 

 

Under the AAR contract, a party is given an opportunity to cure these types of potential breach of contract. If a party fails to comply with the contract, the other party must deliver a cure notice before declaring a breach. If the non-compliance is not cured within three days after delivery of the cure notice (the cure period), the failure to comply becomes a breach of contract.

 

The cure notice provides a second chance to fix a problem before it becomes a breach – the cure notice does not address what happens when there is a breach.

 

All AAR contracts also contain a remedies section and alternative dispute provisions for dispute resolution.  If the situation arises – point these provisions out to your client. 

 

Remedies for Breach of Contract

Upon a breach, the party seeking relief generally has one of the following remedies:

 

1.      Contract Cancellation:  A contract may be cancelled for a material breach, misrepresentation, or fraud. However, contract cancellation is not the remedy for every breach. To justify cancellation, the breach generally must relate to a vital contract provision. Cancellation is generally not warranted for a breach of a minor contract provision that can be addressed by monetary damages.

 

2.      Specific Performance:  Specific performance may be available for a breach such as the failure to close escrow.  However, the court has wide discretion in these types of cases and specific performance is never a matter of absolute right.

 

3.      Damages:  Damages are monetary compensation for the loss suffered due to a breach of contract. The amount of damages will depend upon the circumstances and the specific breach. Generally, emotional distress damages will not be awarded for breach of contract. Similarly, punitive damages, which are damages designed to punish, are seldom awarded. However, a damage award may include an award of attorney’s fees to the prevailing party.

 

4.      Liquidated Damages:  Liquidated damages are a specific sum of money that has been agreed upon in the contract as the amount of damages to be recovered for breach of contract. The earnest money is designated as liquidated damages in the AAR contracts.  However, if there is an unreasonably large amount of earnest money, the court may refuse to award the earnest money as liquidated damages.  

 

Alternative Dispute Resolution

The AAR contract requires mediation and, if unsuccessful, defaults to binding arbitration, unless one of the parties opts out to litigate in court. https://www.aaronline.com/resolve-disputes/buyer-seller-disputes/  

 

·         Mediation is a process in which the parties meet with an impartial person who helps to resolve the dispute informally and confidentially. Agreeing to mediate does not mean that the parties are agreeing to settle, but simply means the parties are trying to resolve a dispute without going to court. The parties do not give up any right to pursue other legal remedies if mediation is not successful.

 

·         Arbitration is a process that is similar to court litigation but is generally quicker and more cost effective. Pursuant to the AAR contract, if mediation does not resolve the dispute, the unresolved dispute must be submitted to binding arbitration, unless either party opts out within 30 days after the conclusion of the mediation conference by written notice to the other.

 

Court Litigation

If the parties do not resolve their dispute through alternative dispute resolution, court litigation may be the only option.

 

·         Small Claims Court:  Many disputes in which the amount at issue is $3,500 or less can be resolved in small-claims court. The AAR contracts do not require mediation if the parties file a small claims court action. The case will be heard by either a judge or hearing officer, who then makes a decision that is final.  https://www.azcourts.gov/selfservicecenter/Small-Claims

 

·         Justice Court:  A lawsuit may be filed in the Justice Court if the amount involved is less than $10,000.  https://www.azcourts.gov/AZ-Courts/Justice-Courts

 

·         Superior Court:  If the claim exceeds $10,000, the claim must be filed in the Superior Court. Superior Court cases can take years to resolve at a substantial cost – both financially and emotionally.  https://www.azcourts.gov/AZ-Courts/Superior-Court

 

If you are involved in a transaction in which one of the parties alleges a breach of contract, immediately notify your designated broker or manager, and advise your client to obtain independent legal counsel.  https://www.azbar.org/for-the-public/public-service-center/

 

 

Michelle Lind is Of Counsel to the Arizona REALTORS® and the author of Arizona Real Estate: A Professional’s Guide to Law and Practice.  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.  

Important Contract Considerations to Protect You and Your Client

 The contract in a real estate transaction can prevent problems or cause disputes.  The Arizona REALTORS® standardized contract forms reduce risk, but the forms must be completed and utilized correctly.  Unfortunately, that is not always the case, and contract disputes result in the majority of the calls to the Arizona REALTORS® Legal Hotline.  Many of these disputes can be avoided by following basic contract law. 

 

Contract Legal Requirements

For any valid contract to exist there must be an (1) offer, (2) acceptance, (3) consideration, and (4) sufficient specificity so that the obligations involved can be ascertained.

 

1.       Offer:  An offer creates a power of acceptance, permitting the offeree - usually the seller - to accept and transform the offer into a contract.  Remember, when an offer (or counteroffer) is not supported by independent consideration (which it generally is not), the offer can be withdrawn at any time prior to acceptance.

 

2.       Acceptance:  If the offer specifies the time and manner for acceptance, like the terms in the Arizona REALTORS® contract forms, those provisions will control.  For example, if the contract must be accepted by a specific date and time, the offer expires thereafter and cannot be accepted.  And any attempt to change the terms of the offer, such as a change in escrow/title company or the close of escrow date, constitutes a counteroffer, which rejects the offer.

 

3.       Consideration:  Although consideration is necessary to a valid contract, consideration is easily demonstrated. Consideration need not be money but may involve a promise for a promise, which is the case in the Arizona REALTORS® contract forms. 

 

4.       Sufficient Specificity:  The contract must be sufficiently specific and contain all the material legal rights and obligations regarding the transaction. For example:

o   The Parties:  The identity of the buyer and seller should be set forth with specificity. If either party is a corporation, limited liability company or partnership, all pertinent information about the entity should be included, such as the entity’s name, address, and state of formation. And the signer’s authority to bind the entity should be confirmed and documented in writing. 

In addition, to prevent a voidable contract, both parties must be adults – 18 years or older.  The parties must also be competent. Competency may be an issue if dealing with an elderly or infirm buyer or seller, or a party with a mental disability or incapacity.  However, to invalidate a contract based on incompetency, the party must have been incompetent at the time of the execution of the contract – not at some time thereafter.

o   The Property:  Identifying the property must be done with specificity. Generally, the property’s street address is legally sufficient to identify the property.  However, if the property is identified by legal description, it is best to simply attach the legal description obtained from the title company as an exhibit and reference the exhibit on the line indicated on the Arizona REALTORS® form, rather than to rewrite the description and risk typographical errors.

o   Contingencies:  A contingency is a clause that requires the completion of a certain act before the parties are obligated to perform their contractual obligations, such as obtaining financing.  Contingency clauses must be drafted precisely because contingencies frequently become the subject of dispute. When trying to write a contingency that has not been standardized in the Arizona REALTORS® Additional Clause Addendum, consult with your broker or manager to make sure that the clause is sufficiently specific, clear, and complete.  Remember, if any handwritten provisions in the contract are inconsistent with the printed, boilerplate provisions on the standardized form, the handwritten provisions will prevail.

Additional Legal Requirements Specific to Real Estate:

Real property contracts must meet certain additional requirements to be valid. 

 

o   Signed Writing:  While some verbal contracts are valid (although difficult to prove), a contract for the sale of real property must be in writing and signed by the party to be charged to be enforceable (Statute of Frauds - A.R.S. section 44-101(6)).  All material modifications and amendments must also be evidenced by a signed writing.

o   Both Spouses Must Sign:  Both husband and wife must sign a real estate contract for the community property to be obligated. Therefore, both husband and wife must sign the contract and any modifications and amendments to the contract as well.

Arizona REALTORS® Standardized Contract Forms

The Arizona REALTORS® maintains transaction forms produced by the Association that have been adopted for use by members statewide. The Arizona REALTORS® currently has 70+ forms that are often revised or supplemented to address new legal issues, market changes, or simply to clarify a provision.  Several forms are currently being revised, including the SPDS and the BINSR. 

 

There are numerous benefits of the Arizona REALTORS® standardized forms, such as:

o   Prompts in the forms to ensure all the contract law basics are covered.

o   Uniformity of practice, which reduces ambiguity and disputes.

o   Regular updates to comply with state and federal law/regulations.

o   Increasing the value of being represented by a REALTOR®.

o   Eliminating the need of the broker to review boilerplate language of each form during the 10-day broker review required by statute.

o   Eliminating the need of salespersons to read each form’s boilerplate provisions when writing or reviewing an offer.

 

It is critical that REALTORS® understand all the terms of the Arizona REALTORS® forms they are using in a transaction and how they are interpreted.  But it is also important to remember to cover all the contract law basics. 

Michelle Lind is Of Counsel to the Arizona REALTORS® and the author of Arizona Real Estate: A Professional’s Guide to Law and Practice.  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.