FACTS:                    

The buyer and seller executed an Arizona REALTORS® Residential Resale Purchase Contract (the “Contract.”)  Two weeks later and while escrow was pending, the parties negotiated a two-week post-possession agreement to accommodate the sellers moving into their new home. 

ISSUE:                      

Must the agent advise their clients to seek counsel before signing the post-possession agreement?

ANSWER:                

Yes.

DISCUSSION:         

The Commissioner’s Rules require a licensee to recommend in writing that a “client seek appropriate counsel from insurance, legal, tax, and accounting professionals regarding the risks of pre-possession and post-possession agreements of a property.”  A.A.C. R4-28-1101(K).  Language consistent with the Commissioner’s Rules is set forth on lines 34-35 of the Contract, which likely satisfies the disclosure mandate from the Department of Real Estate.  However, the best practice is to make an additional written disclosure, especially here, where the post-possession agreement came to fruition two weeks after the Contract was signed.