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The purchase contract has just been signed, and the sale of the home is scheduled to close in thirty days. The listing agent has now learned that the seller has just recovered from swine flu. Does the listing agent have the obligation to disclose to the buyer that the seller had swine flu?

Probably not. A.R.S. §32-2156(A)(2) protects a seller and the real estate licensees from failing to disclose HIV/AIDS or “any other disease that is not known to be transmitted through common occupancy of real estate.” This statute probably applies to the disclosure of swine flu because transmittal of the swine flu virus by the touching of an object, such as a table or door-knob, can only last up to eight hours. After the closing of a sale transaction, very rarely is the buyer in the home within eight hours after the seller has vacated the home. Therefore, swine flu is a disease that probably cannot be “transmitted through common occupancy of real estate.”

Listing agents 1 and 2 (co-listers) represented a seller in the sale of her property. Listing agent 2 initialed section 3 of the Disclosure of Information on Lead-Based Paint and Lead-Based Paint Hazards (Sales) Addendum (the “LBP Addendum”) and delivered it to the buyer. Should both listing agents sign and initial the LBP Addendum?

Yes,  Section 3 of the LBP Addendum states AGENT’S ACKNOWLEDGEMENT (Any real estate agent who is to receive compensation from the seller or the listing agent with regard to the transaction contemplated in this disclosure must initial below).

Therefore, both co-listers will need to sign and initial where indicated on the LBP Addendum.

Both co-listers will need to _____ where indicated on the LBP Addendum



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A buyer purchased a “spec” home from a builder. In the purchase Contract the builder represented that the “spec” home could have gas appliances. After close of escrow the buyer learned that the builder had not run the gas line from the street to the meter on the buyer’s property. Although the builder admits that there was no disclosure of the lack of a gas line, the builder contends that the builder has no liability because the buyer had the opportunity during the inspection period to confirm the existence of a gas line. Does the builder have liability for non-disclosure for the lack of a gas line?

Probably. If a seller knows of a material fact affecting the value of the property and knows that this material fact is not known to the buyer, the seller has a legal duty to disclose this material fact. Hill v. Jones, 151 Ariz. 81, 725 P.2d 1115 (App. 1986). Therefore, the builder had an obligation to disclose to the buyer as a material fact that there was no gas line. Although the buyer could have confirmed the lack of a gas line during the inspection period, the builder still has liability for failing to disclose the lack of a gas line. See Barnes v. Lopez, 25 Ariz. App. 477, 544 P.2d 694 (App. 1976) (Seller still liable for zoning misrepresentation even though the buyer could have confirmed correct zoning.)

The bank has foreclosed on a home built prior to 1978. At the foreclosure sale the bank received a trustee’s deed. The bank has now entered into a contract to sell the home, but does not want to use the lead-based paint disclosure forms. Is the bank as the seller of an REO property required to make a lead-based paint disclosure?

Yes. The transfer of title to the bank at the foreclosure sale by the use of a trustee’s deed is exempt from the lead-based paint requirements. See 24 CFR § 35.82 (a). There is no exemption, however, when the bank is acting like any other seller of real estate.

Quick Quiz

Fill in the Blank:

The transfer of to the bank at the foreclosure sale by the use of a trustee’s deed is exempt from the lead-based paint .

In the seller’s property disclosure statement (“SPDS”), the seller denied that the home had ever been treated for termites. After the inspection period expired, the buyer learned that the seller had the home treated for termites. The buyer no longer wants the home. After being contacted by the buyer, the seller admits that he “forgot” to disclose in the SPDS the prior termite treatment. Can the buyer cancel the contract and get the return of the earnest money?

Yes. Under Section 4f of the contract, the seller is required to update the SPDS to disclose the prior termite treatment. If the seller does not, the buyer is entitled to deliver a three-day cure period notice to the seller demanding that the seller update the SPDS to disclose the prior termite treatment. If the seller does not update the SPDS within three days, the buyer can cancel the contract and get the return of the earnest money. If, however, the seller does update the SPDS and discloses the prior termite treatment, the buyer can cancel the contract within five days and get the return of the earnest money.

The seller is an investor who does not want to provide an SPDS to the buyer and is demanding that Section 4a of the contract requiring a SPDS be deleted. Does Arizona law require a seller to deliver an SPDS to the buyer of a home?

ANSWER:

No.  Under common law disclosure principles, a seller of real property must disclose to a buyer any material, adverse fact affecting the value of the real property.  Unlike some states, in Arizona, a formal SPDS is not required by statute.

Note: The seller’s SPDS, however, is valuable for disclosure of more than just the material, adverse facts, e.g., the identities of utility providers and any transferable termite warranty. 

Under common law disclosure principles, a seller of real property ______ to a buyer any material, adverse fact affecting the value of the real property.



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