Sellers of property are obligated by law to disclose all known material (important) facts about the property to the buyer. In addition, there are specific disclosures required by law. For example, on homes built prior to 1978, federal law requires you to disclose information on lead base paint. If you are selling property in an unincorporated area of an Arizona county that is not in a subdivision, you are required to file and record an affidavit of disclosure.
By law, there are three specific exemptions to the seller's obligation to disclose. They are:
- The site of a natural death, suicide, homicide, or any other crime classified as a felony.
- A property that has been 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.
- If the property is located in the vicinity of a sex offender.
Be aware, the law does not protect a seller who makes an intentional misrepresentation. For example, if a buyer asked whether there has been a death on the property and the seller knows that there was such a death, the seller should answer truthfully or respond that legally they do not have to answer the question.
The Arizona Association of Realtors has designed a seven-page form, which is designed to help sellers to make the legally required disclosures and to avoid inadvertent nondisclosure of material facts. It is important to note that while a seller has an obligation to disclose, they generally do not have a legal obligation to correct the problem.
The vast majority of sellers are honest and do an excellent job of disclosing pertinent details regarding their property; however, there is always a chance that a seller may hide a material fact. As Realtors, we strongly encourage and explain to sellers the importance of full disclosure so that later, costly repercussions are avoided.
Buyers also have an obligation to disclose certain pertinent facts. For example, if a buyer enters into an agreement to purchase a property, and during the escrow period finds that they cannot qualify for a loan and complete the transaction, they must immediately disclose this to the seller.
Lastly, there are two rules of thumb regarding disclosure:
- If you are wondering if you should disclose something, then you should.
- Honesty is the best policy.
Ray Pugel is the designated broker for Coldwell Banker Bishop Realty. For more information, call (928) 474-2216.