Sellers of real estate in Arizona are required by law to disclose any and all important facts about the property they are selling. Here is some basic information about disclosures in Arizona from both the buyer's and seller's perspectives.
Disclosures for Buyers of Commercial Property
When selling a commercial property, there is a disclosure form to complete. There are questions regarding zoning issues, parking, signage, leases, contracts, security lighting, and termites.
Disclosures for Buyers of Land
When selling vacant land, the information that must be disclosed includes land surveys, utilities, water rights, soil issues, and both current and past land use.
Most readers here are probably most interested in disclosures involving residential real estate, or, in other words, disclosures involving home sales.
Disclosures for Buyers of Residential Real Estate
The Arizona Association of Realtors ("AAR") has created a disclosure form to help the seller fulfill their legal obligations, informing the buyer about a specific property. This six-page form is called the Residential Seller's Property Disclosure Statement, also known as SPDS. Realtors typically don't say those initials—they say it like a word, "spuds."
The SPDS form is divided into six sections:
- Ownership and Property
- Building and Safety Information
- Environmental Information
- Sewer/Waste Water Treatment
- Other Conditions and Factors
Specifically, it addresses roof and plumbing leaks, termites, electrical issues, pool or spa problems, noise issues, and everyone's favorite, scorpions. If the AAR purchase contract is being used, the seller must also provide the buyer with a copy of a report showing a five-year history of insurance claims that have been filed, or for the length of time, the seller has owned the property. This report is commonly referred to as the CLUE report, or Comprehensive Loss Underwriting Exchange report.
If a home was built prior to 1978, the seller must also disclose to the potential buyer any information they have regarding lead-based paint. This includes any reports or inspections that have been conducted. The realtor should provide the buyer with the pamphlet, "Protect Your Family from Lead in Your Home."
An Affidavit of Disclosure is required if the property is located in an unincorporated area of the county, with five or fewer parcels of land being transferred.
Sample forms for these transactions can be found at AAR online.
Points You Don't Have to Disclose to a Potential Buyer
It is important to note what is NOT required by Arizona law to be disclosed. There are three main items.
- You are not required to tell a buyer that the home has been the site of natural death, suicide, homicide, or any other crime classified as a felony.
- You are not required to tell a buyer that the home has been owned or occupied by someone exposed to HIV, diagnosed with AIDS, or any other disease not known to be transmitted through common occupancy.
- You are not required to tell a buyer that the home is located in the area of a sex offender.
If you have to ask yourself, "Should I disclose _____?" the answer is yes. When in doubt—disclose.
A Word of Advice to Buyers About Disclosures
All the forms, affidavits, and reports that you might receive at contract time are not substitutes for the various inspections that you should have performed, by a reputable inspection company, on the property that you are considering purchasing.
Also, be aware that the disclosure forms mentioned above may not be required for all residential real estate transactions. For example, SPDS forms are not required for lender-owned homes (foreclosures). There are other situations in which the SPDS may be waived. In any case, it's still a good idea to take a look at a blank form so that you can have appropriate inspections performed that will address your concerns.
All forms and disclosure regulations mentioned herein are subject to change without notice.