Understanding the Scope of Real Estate Disclosures in Arizona

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Buying a home can be one of the most exciting milestones in your lifetime. However, if you purchased a house that was not on par with your expectations, it can be a major letdown and a financial drain. The good news is that you have legal options to pursue.

If, for example, there are excessive repairs that need to be done, persistent black mold that needs to be dealt with, or another significant flaw that you were not aware of before you purchased the property, you may be able to pursue legal action if the seller failed to disclose these issues.

How to Prove You Were Victimized by Fraud

Arizona property sellers are required by law to disclose “material” information that a buyer would consider important when faced with making a purchase or investment decision about a piece of real estate. This information is often related to factors that would affect the property’s price, but there is other information that a seller may be required by law to disclose to a buyer.

The Arizona legislature has yet to draft a uniform disclosure form that a seller must submit to a Buyer before completing a transaction. To provide a substitute, the Arizona Association of Realtors has created a document called the Residential Seller’s Property Disclosure Statement that includes dozens of possible items that a seller should consider disclosing.

A good starting point for a buyer is to review this form and determine if anything listed applied to your property that the seller did not disclose.

What Is Required to Be Disclosed?

In Arizona, anything material that the seller knows must be disclosed to the buyer, even if the buyer did not specifically inquire about it, is required to be disclosed. However, an important caveat is that the seller is not required to disclose anything they did not know about, even if they should have known of its existence. This gray area is where the experience of a real estate law firm like Fraud Fighters Law Firm can help prove the seller’s prior knowledge.

Areas that are material and therefore require disclosure include:

  • Ownership (whether the seller is a non-resident or foreign person)
  • Property location (specifically if the real estate is in an unincorporated area)
  • Structural and safety issues related to heating, plumbing, electricity, swimming pools, saunas, improvements, and animal infestations
  • Utilities and drinking water
  • Environmental issues related to soil, drainage, noise, and odors

This list is not meant to be inclusive of everything that a seller must disclose. We encourage you to review the Residential Seller’s Property Disclosure Statement and make notes of anything you believe should have been revealed but wasn’t. The legal team at Fraud Fighters Law Firm can discuss these items with you in a strategy session to determine the severity of the real estate fraud you’ve experienced and the best way to proceed in recovering damages.

What Does Not Have to Be Disclosed?

Though not every single flaw or issue with a property has to be disclosed, it’s a good idea for a seller to err on the side of caution and reveal everything that has the potential to be considered material. For example, a small carpet stain or scratch on the floor isn’t likely to be significant enough to require disclosure. Generally speaking, an item needs to be disclosed if any one of the following is true:

  • It affects a buyer’s decision to buy the property
  • It affects the value of the property
  • It affects the buyer’s use of the property

However, there are three critical items that a seller has no obligation to disclose even though a reasonable buyer might perceive them as material:

  • Whether a sex offender lives in the vicinity
  • Whether a murder, death, suicide or felony occurred on the property
  • Whether a person with HIV or AIDS resided on the property

For the first two issues, sex offender status and death or felonies on the property, the rationale is that this information is easily accessible for free online. Prospective buyers can search for convicted sex offenders in the area through the Arizona Department of Public Safety database. Concerning deaths and felonies on the property, there are various online resources a buyer should review as part of their due diligence. For the issue of diseases like HIV and AIDS, disclosure is not required because these diseases are not known to be transmissible through mere occupancy.

Despite the lack of disclosure requirements in these three areas, a seller cannot lie. For example, if a buyer asks if a sex offender lives nearby, a seller can be held liable for saying “no” if, in fact, a sex offender lives next door. Here a seller could say they are not legally required to answer, but lying puts them in a situation where they could be held to standards of fraudulent misrepresentation.

Did the Seller Meet Arizona Disclosure Requirements?

Under Arizona law, there are two ways for a buyer to show that a Seller failed to meet the state’s disclosure requirements:

  1. The disclosure statements were false. Here, the buyer can show that the actual condition of the property varies significantly from what was disclosed.
  2. The issues not disclosed are material. Again, if an issue with the property is material, it must be disclosed by the seller. Lack of disclosure of a material allows a buyer to pursue legal action.

3 Options When Disclosure Requirement Have Not Been Met

Suppose the seller failed to meet the disclosure requirements, and it resulted in a material difference between how the property was represented and the property you now own. In that case, you have three options to help resolve the situation:

  1. Seek money damages. A buyer can seek substantial compensation for financial damages they’ve incurred as a result of the transactions. These damages may also include punitive damages if there is evidence that the seller acted with malice in intending to defraud a buyer. Malice can often be shown by presenting evidence that the seller intended to lie for the purpose of making or increasing a profit. It’s also possible to uncover other motivations the seller had that might have inspired them to stretch the truth beyond legal limits.
  2. Rescind the contract. You may decide that you want out of the deal entirely. In this case, we can work with you to rescind the agreement, which means you can back out of the deal without penalty. Further, the rescission will put you in the “same place” you were in before you signed the contract, returning any financial outlays or expenses to the buyer.
  3. Pursue mediation. With more than 90% of mediations resulting in a settlement for the buyer, this avenue is worth pursuing if you want to keep the property and receive financial compensation in the form of damages for resolving the issues that had not been properly disclosed.

Our Team at Fraud Fighters Law Firm Wants to Help You

Being a victim of real estate fraud can make you feel helpless and angry, but you have more recovery options than you think. At Fraud Fighters Law Firm, we help people get their money back when they’ve been cheated in real estate deals. Call (602) 427-4437 or book online to schedule your strategy session. We will work together to determine the best route to move forward.

 

Copyright© 2021. Fraud Fighters Law Firm. All rights reserved.

 

The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

Fraud Fighters Law Firm
12406 N. 32nd St., STE 103
Phoenix, AZ 85032
(602) 427-4437
https://fraudfighterslawfirm.com

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