FACTS:

A seller enters into an Exclusive Right to Sell contract with her broker. While filling out the listing paperwork to sell her home, the seller tells the broker that the HOA does not allow homeowners to rent their properties for periods less than 30 days. However, the seller knows that multiple residents do lease their properties out as short-term rentals for less than 30 days.

ISSUE:

Should the seller disclose that the HOA does not allow short-term rentals in the community, but that the seller is aware that the rule is frequently violated?

ANSWER:

Yes.

DISCUSSION:

A seller must disclose known material facts. See Hill v. Jones, 151 Ariz. 81, 85, 725 P.2d 1115, 1119 (App. 1986). A fact is material if it is one to which a reasonable buyer would attach importance in making a decision as to the consideration to be paid for the property. Id.  Because the CC&Rs’ restriction on rentals is arguably a material fact, the seller should make the disclosure.