REAL ESTATE SELLERS – DISCLOSURE REQUIREMENTS – THE LAW?
Arizona Real Estate SPDS – Any of you who have been through the process of buying or selling a house in Arizona know that the seller makes disclosures of information about the property that the buyer may find helpful in deciding whether to go forward with the purchase. These are commonly referred to as “SPDS” (prounounced “SPUDS”). SPDS stands for Seller’s Property Disclosure Statement. The law requires disclosure of certain facts about the property, but not disclosure of other facts. As a seller, how do you know what you have to disclose, and what information you may be able to hold back?
SPDS – ARIZONA LAW
As a general rule in Arizona, the seller is required to disclose material facts known to the seller which may adversely affect the buyers decision to purchase the property. In this context material means “important.” These important facts have to be disclosed even if the buyer does not ask about them. The rule dates back to the decision of the Arizona Court of Appeals in Hill v. Jones, 151 Ariz. 81 (App. 1986). In that case, the Court held that a seller had a duty to disclose termite damage and a past termite infestation.
Whether a fact is important so as to require disclosure is not always an easy determination. A fact that is important to one person may not be important to another. The Arizona Association of Realtors has put together a commonly used form called the “Residential Seller’s Property Disclosure Statement (SPDS)” to assist Sellers in disclosing important information about the property. The SPDS covers a range of topics, such as legal ownership, structural problems, roof, heating and cooling, plumbing, electrical, and other matters. Your real estate agent has probably provided you a SPDS form. While the form is fairly comprehensive, it does not, and was not meant to, cover all possible material/important facts. If you as a seller are aware of a material fact that is not covered by the SPDS, you still have to disclose it. The Disclosure Advisory accompanying the SPDS states in bold, all cap letters “WHEN IN DOUBT – DISCLOSE!” We think that it pretty good advice.
WHAT IS NOT REQUIRED TO DISCLOSE?
On the other hand, Arizona law specifically identifies certain facts that a seller does not have to disclose even if the fact is material. A.R.S. § 32-2156 provides that sellers are not obligated to disclose the property is or has been:
- The site of a natural death, suicide or homicide or any other crime classified as a felony;
- Owned or occupied by a person exposed to HIV, or diagnosed as having AIDS or any other disease not known to be transmitted through common occupancy of real estate;
- Located in the vicinity of a sex offender.
We think of these as “stigma” type facts. We note that information regarding residence of registered sex offenders is publicly available on the State’s database.
CAVEAT: DO NOT LIE. While the seller does not have to disclose these facts, the seller cannot misrepresent them either. If a buyer asks whether anyone has died on the property, and the seller knows there has been such a death, the seller cannot say “no” or “I don’t know.” If the seller did so, he or she would be exposing himself/herself to potential liability for misrepresentation. The seller can respectfully decline to answer by saying “I’d rather not answer that,” or “The law does not require me to answer that.” Or the seller can simply state the truth.
This has been a summary of some important legal principles to bear in mind when deciding what you, as a seller of real estate, need to disclose. If you are struggling with the decision whether to decide, err on the side of disclosure. You can also consult an attorney knowledgeable about these matters. We at the Law Badgers are here to help. Call us at 1.833.383.4448 (833.DTF.IGHT), use the contact us now button above, or email us at email@example.com