Have you ever seen this on an MLS listing?  Or maybe it was Owner never occupied no SPDS or CLUE report available OR maybe the listing agent tells you it is AS IS so no SPDS or CLUE is provided.  It certainly sounds official to a buyer or buyer’s agent who doesn’t understand the Residential Purchase Contract or Arizona State Law.  To understand why this a problematic for both buyer and seller (and their agents) lets start with the fact that Arizona State Law requires that seller’s of real property disclose any known material latent (not obvious) defects of the property or where it would correct a previous assumption.  Non disclosure of such facts can be considered an acknowledgement that the defect did not exist and therefore may be considered fraudulent.  It is also important to note here that regardless of what an agent writes into a purchase contract it cannot change State Law.  Simply put a Buyer cannot waiver their right to disclosure nor can a seller waive their legal obligation to disclose.

The AAR purchase contract (section 4) provides for the Seller to provide both a CLUE report and a SPDS (Seller Property Disclosure Statement) within 5 days of contract execution.  So is the seller obligated to provided a SPDS and CLUE?  Unless otherwise written out of the contract, this a a promise the seller has made upon execution and the seller is obligated to deliver these.  I know some of you are asking now “you just told me that Disclosure is REQUIRED BY LAW how can an agent write this out of a contract??”  The SPDS and the CLUE are documents that assist the Seller in making their legally required disclosure.  It is important to understand the distinction here between the method of delivery and the disclosure itself.  The SPDS and CLUE are documents used to assist in the disclosure of any known material latent defects.  These documents (method of delivery) should not be confused with the disclosure.

Well then, what about a property  purchased  AS IS?  Well it is exactly that AS IS or in its existing condition with the seller making no warranties either express or implied.  This has nothing to do with the Seller’s legal obligation to disclose.   Section D line 23-24 of the AS IS addendum states “Seller acknowledges that selling the Premises “AS IS” does not relieve Seller of the legal obligation to disclose all known material latent defects to Buyer.”  AS IS also does not automatically mean that the buyer is not due a SPDS or a CLUE per the contract regardless of what that listing agent told you.

Why doesn’t the seller want to provide the SPDS or the CLUE report to the buyer?  Well I just can’t figure this out.  It is certainly in their best interest to disclose everything they know about the property.  Not to disclose is in violation of State Law and could certainly land the seller and the seller’s agent in hot water.   

The buyer and the seller rely upon their Real Estate Agent to help them navigate a real estate transaction.  If a buyer or seller’s agent fail to properly educate the client regarding the importance of disclosure, the agent could be held liable for failure to help our clients dislcose and breach of fiduciary responsibility.

If you have any questions regarding Disclosure issues in the state of Arizona,  please contact Kevin McClure (Designated Broker) 480-947-6048.