Frequently Asked Questions; 2019 Notice / Disclosure form
On June 1, Arizona REALTORS® will release a new form titled Notice / Disclosure. A copy of the new form that has been approved by both the Risk Management Committee and Executive Committee can be found here. In conjunction with your review of the Notice / Disclosure form, Arizona REALTORS® has prepared the below list of frequently asked questions (FAQs), along with answers and pertinent analysis. Please be sure to review these FAQs to better understand the new form.
Q1 – What was the rationale behind the creation of this new form?
A1 – Throughout the various contracts published by Arizona REALTORS®, parties are instructed to provide notice and make disclosures under a number of different scenarios. To facilitate the conveyance of this information, the Risk Management Committee deemed it beneficial to create a form exclusively for this purpose.
Q2 – Why can’t I use an Addendum to convey notice and make disclosures? It has plenty of blank lines.
A2 – An Addendum has a very specific purpose, which is to amend the terms of the underlying contract. When notice is being provided or a disclosure is being made, the intent is not to change the terms of the Purchase Contract. As such, use of an Addendum for this purpose is inappropriate and could unintentionally change the nature of the parties’ contractual agreement.
Q3 – Can you provide me with an example of when I would use this form to provide notice?
A3 – Lines 65-66 of the Residential Resale Real Estate Purchase Contract require Seller to “deliver notice of all leased items within three (3) days after Contract acceptance.” As of June 1st, the Seller can use the Notice / Disclosure form to convey this information.
A second example can be found on lines 91-92 of the Commercial Purchase Contract. This portion of the Contract provides Buyers with an opportunity to deliver “written notice” prior to expiration of the Due Diligence Period or five (5) days after receipt, whichever is later, disapproving of additional Seller disclosures and information.
Q4 – Can you provide me with an example of when I would use this form to make a disclosure?
A4 – Lines 187-188 of the Residential Resale Real Estate Purchase Contract require Seller to immediately notify Buyer of any changes in the Premises or disclosures made herein, in the SPDS or otherwise. In the event that additional disclosures are needed, the Notice / Disclosure form could be used for this purpose.
Q5 – Do I have to use this form to convey notice?
A5 – No. Arizona REALTORS® contracts dictate that notices shall be in writing and also dictate the manner in which notices must be conveyed. The contracts do not require that any specific form be utilized.
Q6 – Line 18 contains a signature line. Should the document be signed by the Buyer, Seller or agent representing the respective party providing the notice or disclosure?
A6 – The Notice / Disclosure form should be signed by the party providing the notice or disclosure, either the Buyer or the Seller. The form should not be signed by the agent.
Q7 – Why is there no signature line for the party receiving the Notice / Disclosure form?
A7 – The Notice / Disclosure form is unilateral in nature. To be effective, it must be signed by the party originating the form and properly conveyed. It does not need to be signed by the receiving party. Furthermore, if the receiving party’s signature was required yet they refuse to sign the form, such a scenario could result in confusion.
Q8 – Why is the form not applicable to rental properties? Why can it be generated only by buyers and sellers, not landlords and tenants?
A8 – The Risk Management Committee spent a lot of time discussing whether the form should be applicable to rental properties and decided against it for two reasons. First, the Arizona REALTORS® library of forms already contains a large number of notice forms to be used by landlords and property managers depending on the situation. Second, even if the tenant was represented at the time the lease was negotiated, that representation terminated upon conclusion of the transaction. Consequently, if a REALTOR® thereafter provides services such as supplying a form to their former client or submitting notice on their behalf, that action may unintentionally reestablish an agency relationship.
Q9 – By what means should this Notice / Disclosure form be conveyed?
A9 – Arizona REALTORS® contracts state that notice shall be deemed delivered and received when: (i) hand-delivered; (ii) sent via facsimile transmission; (iii) sent via electronic mail, if email addresses are provided; or (iv) sent by recognized overnight courier.