What Is The Legal Duty To Make A Disclosures In A Residential Real Estate Purchase

In most states, sellers are required to make certain disclosures about the condition of residential property to prospective buyers. The disclosures are intended to provide buyers with full and accurate information about the property they intend to purchase. If a seller does not adequately make disclosures in compliance with the law, then the buyer can bring an action against the seller for fraud, misrepresentation or failure to disclose.

Arizona’s Disclosure Law

Arizona’s legal duty to disclose certain information about residential real property for sale was established in the case of Hill v. Jones, 151 Ariz. 81, 725 P.2d 1115 (App. 1986). In that case, prospective buyers of a residential home noticed possible termite damage, which was firmly denied by the sellers. The inspection report concluded that there was no evidence of termite infestation visible upon inspection. After purchasing the home, the buyers discovered that it had undergone treatment for termite infestation on a number of prior occasions. In addition, the termite inspector subsequently found evidence of termites. The sellers did not disclose information about past or current infestations to the buyer or the inspectors. The central question addressed by the Court was whether the sellers had a duty to disclose these material facts known to the seller and whether termite damage and a previous infestation constituted material facts. The Court concluded that the law does recognize a duty to disclosematerial facts, and the existence of a pest infestation constitutes a material fact.

Disclosure of Material and Non-Material Information

Arizona requires sellers to make disclosures of material information about which the seller actually has knowledge. Material disclosures refer to those facts that may affect the decision to purchase the home or impact the value of the home. The seller must also make non-material disclosures if the buyer asks about those aspects of the property. Therefore, if a buyer asks about a feature of the home that the seller does not think is important, the seller must nevertheless respond truthfully and fully to such request. The second aspect of the disclosure requirement states that the seller is required to disclose information that he already knows about. As such, there is no obligation for the seller to initiate a thorough examination of the home or to inform the buyer of issues about which he should have known. Most realtors provide a standard disclosure form.  The seller can fulfill his disclosure obligation by answering the questions accurately and not answering if the information requested is not known. After the disclosure statement is given to the buyer, the seller has an ongoing duty to disclose conditions that are present that may be deemed material until the transaction has closed.

Chernoff Law handles business and real estate litigation matters throughout Arizona. Contact us by calling 480-719-7307 to discuss your legal matter.