Although Arizona law requires a home seller to disclose known material defects in a property to a prospective buyer, the law does not require the disclosure to be made in any particular form. Most sellers in Arizona will fulfill this disclosure requirement by completing the Residential Seller’s Property Disclosure Statement (SPDS), a form created by the Arizona Association of Realtors (AAR). A copy of the SPDS can be found on the AAR website.
Before purchasing a home in Arizona, you should closely review the SPDS provided by the seller.
The SPDS begins with an important message to you, the buyer. Although the seller has a legal obligation to disclose all known material facts about the property, you should not rely solely on the information provided by the seller. The property may have material defects that the seller is simply unaware of or would like to hide. In the words of the SPDS, you need to “take an active role in obtaining information” about the property, including verifying the information provided by the seller and having the home professionally inspected.
This is sound advice on many levels. Even the most trustworthy of sellers may be unaware of, or have become blind to, various problems with the property. Outsiders, particularly professional inspectors, are likely to notice issues and defects that the seller would never have told you about. (Besides, not all sellers are entirely honest.)
The Arizona SPDS is divided into the following six sections.
The first section of the SPDS covers general information about the property: Where is the property located? Who owns it? Are there any tenants in the property? Is the property part of a homeowner’s association? Is it subject to any liens, assessments, or easements?
Much of this information can and should be confirmed by simply visiting the property and reviewing a copy of the title report.
Some of the seller’s answers to the questions in this section will require additional action by you or the seller. If the property is located in unincorporated territory as opposed to a city, the seller is required to provide to you an Affidavit of Disclosure, which provides additional information about access to and utilities that service the property.
If one or more of the sellers are nonresident aliens, you may be required to withhold a portion of the purchase price from the seller under the Foreign Investment in Real Property Tax Act. If the property was built before 1978, the seller is required to provide to you a lead-based paint disclosure form.
The second section of the SPDS provides information about the actual structure of the home: its roof, walls, ceiling, doors, windows, floor, foundation, fireplace, and chimney. The seller is asked to describe the condition of the heating and cooling systems, plumbing, electrical and safety systems, and any available water features, such as a pool or hot tub.
The seller is also prompted to provide information about termites and other types of wood infestation, the presence of various types of insect or animal pests, and whether any work was ever done on the property.
To verify the information provided by the seller in this section, you will likely need to hire professional inspectors, such as a roof inspector or a termite and pest control company.
This short section covering utilities asks the seller whether the property receives certain utilities and other services, such as electricity, natural gas, cable, telephone, garbage collection, and water, and to name the providers of these services. Confirm the seller’s answers by contacting the providers listed.
Is the property affected by loud noises due to its proximity to an airport, railway line, or traffic? Was the property ever used as a meth lab? Has the property suffered water damage or been affected by mold?
These and many other questions covering the environmental status of the property are asked of the seller. Much of this information may be confirmed by contacting the Arizona Department of Real Estate or the Arizona Board of Technical Registration, or by hiring a professional inspector.
This section on wastewater treatment was added during the last revision of the SPDS due to the high number of lawsuits resulting from sellers falsely claiming that their properties were connected to a sewer. The seller is asked whether the property is connected to a sewer or whether there is an on-site wastewater treatment facility, such as a septic tank.
Buyers are advised to contact a professional to verify that the property is, in fact, connected to the sewer. If the property is served by a septic tank or other on-site wastewater treatment facility, the treatment facility must be professionally inspected prior to the sale of the property.
Although the Arizona SPDS appears comprehensive, perhaps even overly so, this final section prompts the seller to provide any other information that may affect the buyer’s decision to purchase the property or the value of the property. As mentioned earlier, Arizona law requires the seller to provide all known material information about the property, whether the SPDS specifically asks for it or not.
Keep in mind that the seller is not required to disclose some types of information that you as a buyer may consider very material, including whether anyone died or was killed on the property, whether any previous owner or occupant was HIV-positive, and whether any sex offenders live nearby. (You can, however, check the Arizona Sex Offender Community Notification website for the latter information.)
Although an Arizona seller is not legally obligated to provide an SPDS to the buyer, the standard form contract used in most home purchases in that state, the Arizona Association of Realtor’s Residential Resale Real Estate Purchase Contract states that the seller is required to deliver the SPDS to the buyer within five days of the contract’s effective date.
Despite this, some sellers state in their listings that the SPDS will not be provided. If you run into this situation, you should state in your offer that the SPDS is required. If the seller reaffirms in the counteroffer that the SPDS will not be provided, a blank version of the SPDS will still be useful to you as a checklist when evaluating the property.