Selling Property in Arizona? A Guide to Seller Disclosure Laws and Liability

Selling a home in Phoenix, or anywhere across the Grand Canyon State, involves more than just finding the right buyer and agreeing on a price. Arizona law places specific duties on sellers to disclose certain facts about their property. Understanding these seller disclosure laws is crucial to avoid potential legal issues and liability down the road. We want to help you navigate this complex landscape with confidence.

When you sell property, whether it’s a cozy starter home near Camelback Mountain or a sprawling estate in Scottsdale, buyers expect transparency. Arizona’s disclosure requirements protect buyers by ensuring they receive important information about the property’s condition. These laws also protect sellers who meet their obligations by clearly defining what must be disclosed.

What Are Arizona’s Seller Disclosure Requirements?

Arizona Revised Statutes (A.R.S.) Title 32, Chapter 20, outlines many of the requirements for real estate professionals and transactions, including aspects of seller duties. While specific statutes do not list every single item a seller must disclose, common law and case precedents establish a broad duty to disclose all known material (important) facts about the property.

A material fact is anything that might influence a buyer’s decision to purchase the property, or the price they are willing to pay. This includes adverse conditions, defects, or other issues. Simply put, if you know something is wrong with your house, you likely need to tell the buyer.

The Arizona Seller’s Property Disclosure Statement (SPDS)

The Arizona Association of REALTORS® (AAR) Seller’s Property Disclosure Statement, often called the SPDS, is the most common tool sellers use to meet their disclosure obligations. While not a statutory requirement in itself, this comprehensive document is almost universally used in residential real estate transactions in Arizona. Most real estate contracts require project completion.

The SPDS is a detailed questionnaire. It asks sellers to provide information on various aspects of the property, including:

• Property History: Past damage, repairs, additions, or insurance claims.
• Utilities: Information about water, sewer, gas, and electric services.
• Environmental Concerns: Presence of hazardous materials, soil contamination, or noise issues.
• Structural Components: Details on the roof, foundation, walls, and other structural elements.
• Appliances and Systems: Condition of heating, cooling, plumbing, and electrical systems.
• HOA Information: If applicable, the details about the Homeowners Association, its fees, and rules.

Completing the SPDS requires honesty and thoroughness. Sellers must answer each question to the best of their current actual knowledge. Guessing or intentionally withholding information can lead to significant liability.

Understanding “Known Material Facts”

The key phrase in the Arizona disclosure law is “known material facts.” You are generally required to disclose what you know to be true about the property’s condition. You are not expected to discover unknown defects. For example, if your roof leaked last year and you had it repaired, you should disclose the past leak and the repair. If you genuinely do not know if the plumbing has an issue, you cannot disclose what you do not know.

However, sellers cannot deliberately avoid learning about a problem to escape disclosure. This is known as willful blindness. If a reasonable person in a similar situation would have known, or should have known about a defect, a court might find that you should have disclosed it.

Common Disclosure Issues in Phoenix and Arizona

Here are some specific issues that often arise in Arizona property sales, particularly in the Phoenix metropolitan area:

• Pest Infestations: Termites are a common concern in Arizona. If you have had termite activity, treatment, or damage, you must disclose it.
• Water Issues: Leaks, drainage problems, or past flood damage (even if repaired) are critical disclosures. Water damage can lead to mold and structural issues.
• Soil Movement: Certain areas, especially in the Valley, can experience expansive soils. If you know of any soil-related foundation issues, disclose them.
• Permitting: Any major renovations, additions, or structural changes completed without proper permits should be disclosed. Unpermitted work can create future headaches for a buyer.
• Neighborhood Nuisances: Excessive noise from nearby roads like I-10 or I-17, odors, or other nuisances you experience regularly should be part of your disclosure.
• Previous Damage: Any fire, storm, or other significant damage, even if fully repaired, needs disclosure.

The Importance of Full Disclosure: Limiting Your Liability

Failing to disclose a known material defect can lead to serious legal consequences for a seller. Buyers who discover undisclosed problems after closing may have grounds to sue for:

• Misrepresentation: If you falsely claimed something about the property.
• Concealment: If you actively hid a defect.
• Breach of Contract: If the purchase agreement included specific disclosure requirements you did not meet.

If a court finds you liable, you could be responsible for the buyer’s damages. These damages often include the cost to repair the defect, a reduction in the property’s value, and sometimes legal fees. These cases can be costly and time-consuming, pulling you into court proceedings in Maricopa County.

“As-Is” Clauses: Do They Protect Sellers?

Some sellers try to use an “as-is” clause in their contract, believing it absolves them of all disclosure duties. While an “as-is” clause means the buyer accepts the property in its current condition with all visible defects, it does not relieve a seller of the duty to disclose known material latent defects. Latent defects are those not readily discoverable by a reasonable inspection.

Even with an “as-is” clause, you must still disclose any material defects you know about that a buyer would not find during a typical home inspection.

When to Seek Legal Counsel

Navigating seller disclosure laws can be intricate. Every property and transaction is unique. If you are selling property in Arizona, particularly in the Phoenix area, and have concerns about what to disclose, or if you are facing a dispute after a sale, seeking legal guidance is a wise step.

We at Resolvere Law PLLC understand the complexities of Arizona real estate law. We provide clear answers to our clients’ questions and help them achieve real results. If you are contemplating selling a property, or if a disclosure issue has arisen, we are here to offer guidance. Do not hesitate to contact us at 480-568-1327. We are here to help you find out how to move forward.