Does a buyer in a real estate transaction know how to investigate the property being
considered for purchase? Does a buyer know the questions to ask or where
to go for reliable information? In an effort to address these issues,
the Arizona Department of Real Estate ("ADRE") Disclosure Law Instructor
Development Workshop Committee developed the
Buyer Advisory ("Advisory")
as a tool to educate buyers. The Advisory will provide buyers
with a wealth of information about issues that may be important in a
real estate transaction, explain why certain issues may be important,
and direct buyers, via hyperlink in the electronic version, to sources
of additional information.
The Advisory is available on the ADRE and the Arizona Association of REALTORS®
("AAR") websites. A buyer may utilize the Advisory directly on
one of these websites, or the Advisory may be printed and given
to the buyer, downloaded and provided to the buyer on disk, or delivered
to the buyer via email.
For organizational purposes, the Advisory is
divided into three general sections: (1) common documents a buyer should
review; (2) physical conditions in the property the buyer should
investigate; and (3) conditions affecting the surrounding area that the
buyer should investigate.
Some of the documents addressed in the Advisory
include:
- MLS Printout: Buyers
are advised that the MLS information may be incomplete or an
approximation.
- The Public Report: The
Advisory explains that the Public Report discloses a variety of
material information about the property and provides a link to
additional information from the ADRE.
- Seller's Property Disclosure Statement ("SPDS"):
Buyers are cautioned to verify statements of concern and provided a
link to a sample AAR SPDS form.
- Covenants, Conditions and Restrictions
("CC&Rs"): The Advisory explains how
a buyer agrees to be bound by the CC&Rs and provides a link to
additional information.
- Homeowners' Associations ("HOA") Governing
Documents: HOA articles of incorporation,
bylaws, rules and regulations, and architectural control standards are
discussed and links to information on HOA's in general (both pro and
con) are provided. Information on statutory HOA disclosures is also
provided.
- Title Report or Title Commitment:
The Advisory explains that the title report or commitment
discloses documents that are exceptions to the title insurance
(Schedule B Exceptions), which may affect the use of the property.
- County Assessor's Records:
The Advisory discusses the kinds of information included on the
county assessor's records and provides a link to these records.
- Termites and Other Wood Destroying Organisms:
The Advisory explains that termites are commonly found in
Arizona homes and provides a link to the Structural Pest Control
Commission for additional information.
Some of the physical property conditions addressed
in the Advisory are:
- Repairs and New Construction:
Buyers are advised to request documentation regarding work performed
on the property and directed to the Registrar of Contractors for
additional information. If the roof is 10 years old or older, a roof
inspection by a licensed roofer is recommended.
- Swimming Pools and Spas:
The Advisory explains that a pool or spa company inspection may
be warranted and provided with a link to a partial list of pool and
spa contractors. A source for barrier information for each city and
county is provided along with a link to the required safety notice.
- Square Footage: Buyers
are advised that the square footage noted in the MLS printout or the
county assessor's records should not be relied upon, and a link is
provided for a list of appraisers and architects who can measure the
square footage of a property.
- Sewer and On-Site Wastewater Treatment
Facilities: The Advisory explains
that even if the listing or SPDS indicates that the home is connected
to the city sewer, a professional should verify it. The Advisory
discusses pre-transfer inspection requirements for on-site wastewater
treatment facilities and provides a link to additional information
from the Arizona Department of Environmental Quality.
- Expansive Soil: The
Advisory explains "expansive soils," and provides a link to a map
of expansive soils and a list of state certified professional
engineers.
- Scorpions and Other Pests: Buyers are advised to seek the advice of a pest control
company about any concerns and a link to the scorpion information is
provided.
- Mold: Mold concerns
are addressed; buyers are directed to a pamphlet prepared by the
Arizona Department of Health Services and website information provided
by the EPA and the CDC for further information.
- Flood Plain Status:
The Advisory explains that if the property is in a flood zone,
an additional annual insurance premium may be required. The
Advisory lists several sources of information to help determine if
the property is in a flood hazard area or flood plain.
Some of the conditions that may affect the area
surrounding the property addressed in the Advisory include:
- Environmental Hazards:
Buyers are directed to several sources of information on environmental
hazards, including a link to the Arizona Department of Environmental
Quality Superfund maps.
- Freeway Construction:
A link to the Arizona Department of Transportation maps to find the
nearest future freeway routes and roads in the area slated for
widening is included in the Advisory.
- Crime Statistics:
Links to check the crime statistics for the cities of Phoenix, Tempe,
Glendale, Mesa, Scottsdale, Chandler, Gilbert and Peoria are provided,
along with a list of all Arizona city links where crime statistics for
other cities may be obtained.
- Sex Offenders: The
Arizona registry and community notification program is explained and a
link to the sex offender website is provided.
- Military and Public Airports:
The Advisory explains that the legislature has mandated the
identification of areas in the immediate vicinity of military and
public airports that are susceptible to a certain level of noise from
aircraft. Links to the maps indicating these areas are provided.
The Advisory also summarizes other methods to
obtain information about a property. Because some buyer's broker may
wish to have the buyer acknowledge receipt of the Advisory, a
Buyer's Acknowledgment section and prompt for initials are included.
The Advisory should result in more informed
buyers by providing valuable information and resources. A well-informed
buyer will be less likely to encounter unpleasant surprises about the
property after close of escrow, which benefits not only the buyer, but
the seller and real estate brokers involved in the transaction as well.
K. Michelle Lind, Esq.
K. Michelle Lind is General Counsel/Assistant CEO to the Arizona Association of REALTORS® (AAR). She serves as the primary legal advisor to the association. Michelle oversees AAR’s Risk Management Committee, which includes professional standards administration for twenty of the state’s local REALTOR® associations, and the development of standard real estate forms. She is the author of Arizona Real Estate: A Professional’s Guide to Law & Practice and a regular contributor to the Arizona REALTOR® and the Arizona Journal of Real Estate & Business. Please note that this article is of a general nature and may not be updated or revised for accuracy as statutory or case law changes following the date of first publication. Further, this article reflects only the opinion of the author, is not intended as definitive legal advice and you should not act upon it without seeking independent legal counsel.
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