Arizona Home Sales: Conditions the Listing Real Estate Broker Must Disclose

Real estate brokers helping with home listings in Arizona have specific disclosure obligations to property buyers.

In a typical home sale transaction, there are four parties involved: the seller, the seller’s real estate broker (commonly known as the listing broker), the buyer, and the broker representing the buyer. Arizona law requires the seller of a home to make certain disclosures to the buyer regarding the condition of the home, physical and otherwise. (Seller disclosures are described in detail in Nolo's article, Arizona Home Sellers: Disclosures Required Under State Law.)

This may seem like common sense, since the seller owns the home in question and likely knows more about its condition than anyone else. But Arizona law also requires that the listing broker (the real estate agent whom the seller has engaged to help sell the home) make certain disclosures to the buyer.

The Listing Broker’s Disclosure Obligations

The requirement that a listing broker make certain disclosures to the buyer in a home sale is set out in Arizona’s rules of professional conduct governing licensed real estate brokers and agents (see A.A.C. R4-28-1101). Those rules require a listing broker to disclose in writing to the buyer any information in the broker’s possession that may materially affect the value of the home.

The Listing Broker Has No Duty to Investigate

Listing brokers are not required to inspect the property or make any investigation into the state of the home. The rules of professional conduct only require the broker to disclose what the broker knows.

This may not seem like much of a safeguard for the buyer, but a seasoned listing broker who has gone through numerous home sales may pick up facts about the seller and the home in question during the course of the transaction and will have a good idea of which of those facts should be disclosed to the buyer.

What Information Must Be Disclosed?

The rules of professional conduct governing real estate brokers require the listing broker to pass on to the seller any information that materially affects the value or price of the home. It goes on to list examples of information that is deemed material enough to require disclosure to the buyer: information that the seller may not be able to sell the home in question (perhaps due to some dispute over ownership or some other cloud over the property title), any material defect in the property, or the existence of a lien or other encumbrance on the property.

Information is considered material if a reasonable buyer would want the information and the information would affect the amount the buyer is willing to pay for the home or even the buyer’s decision to purchase at all.

If, for example, the listing broker notices a strange slope in the floor of the home during a walk-through that indicates problems with the foundation, but the slope is not indicated in the seller’s disclosures or home inspection reports, the listing broker would need to let the buyer know about the slope in writing.

Minor defects, such as a crack in a window or a rip in carpeting, which would have little or no effect on the value of the home, are not material enough to require disclosure.

Remedies Against a Listing Broker’s Failure to Disclose

Real estate brokers and agents are licensed by the Arizona Department of Real Estate. In the event a listing broker fails to disclose material information to a buyer, the buyer should file a complaint with the Investigations Division of the Department of Real Estate.

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