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Well, I disagree with your comment about not protecting the seller, and I really don't see how it does much to protect Realtors. I view the form as a courtesy to the sellers to help them identify issues which the buyer may consider to be material to their purchase. Most of the items in the form have likely been the subject of disclosure litigation at some point in time. I'd like to help my clients avoid becoming the subject of such litigation.
I guess we'll have to agree to disagree. Filling out the entire disclosure form won't protect you from a crackpot lawsuit - like being sued for not disclosing "ghosts", or the case in California, where someone sued because a neighbor smoked outside, and it was not disclosed.
A seller isn't a mind reader, so it is my opinion that a "plain-language" disclosure is going to be far less confusing to a judge/jury than a multi-page lawyer-esque questionnaire that attempts to answer every conceivable disclosure issue.
"Non Disclosure" cases are frequently "buyer's remorse" cases. The buyer is mad because they got "ripped off", by the seller, RE agent, banker, etc. The RE forum here is full of "I changed my mind, who can I blame" posts from buyers with remorse - the lawsuit is a symptom of that, not a symptom of "non-disclosure".
Expanding the form to 100 pages of possible "material" disclosures (including Ghosts) wouldn't prevent even ten percent of "disclosure" lawsuits. Buyers would just "perceive" something not on the list, and proceed accordingly.
This thing seems silly. There is no way to prove the existence of a ghost. If the seller told me they thought there was a ghost in their house, I'd ask what evidence they had. If they said things turned on by themselves or there were weird banging sound or something, I'd be more worried about a horribly wired house or bad plumbing and possible leaks, not a ghost. If they said they saw one, I'd think they were gullible or insane and maybe I could get a few more bucks off the price.
While I appreciate the association of realtors trying to protect themselves by creating the SPDS form, I don't believe it does anything to protect the (selling) client, and anyone who bought a house in the past few years from a bank didn't get the courtesy of a spds form themselves.
The law requires disclosure of material facts, not irrelevant factoids like how far away the nearest airport is (if it isn't material).
Going into so much detail only makes it look bad for the seller if they disclosed 9 pages of irrelevant & immaterial things, and failed to disclose the fat guy next door who likes to drink beer in his underwear on his porch.
There's no "check box" for ghosts or "neighbors who drink beer in their underwear" so it makes it VERY easy for a seller to think they're disclosing everything material when they really aren't.
I'm not planning on selling any property in Arizona anytime soon, but you can be sure I won't be filling out the AAR spds form when I do.
The AAR Purchase Agreement requires the Seller to submit a SPDS form within 5 days of signing the contract. See Section 4a, Line 134.
However, a Seller may, and banks typically do this, attach an addendum whereby they state they will not provide a SPDS. The Buyer then has the option of agreeing to the addendum and not getting a SPDS, or of cancelling the contract.
So, if you sell your home, and the buyer agrees to not receive a SPDS, that does not relieve you of disclosing material facts known to you, or that should be known to you about the property. Therefore, you would be well advised to proceed with caution if you proceed down that avenue.
Even if you sell the home "AS IS", you are still not relieved from the disclosure law:
As Is Addendum, Line 23:Seller acknowledges that selling the Premises "AS IS" does not relieve Seller of the legal obligation to disclose all known material facts.
Some rehabbers are traveling that road, stating they won't provide a SPDS because they haven't lived there. However, they are intimately familiar with the property and the community because they have inspected the property and worked on it, repairing and replacing.
Therefore, failure to provide the disclosure form and the buyers accepting the contract without a SPDS does not relieve the rehabber of disclosing material facts that s/he is aware of or should have been aware of.
If a home owner/occupant fails to remember the fat guy drinking beer on the porch in underwear, then that's the Sellers problem if the buyer thinks it's material, and wouldn't buy this house had he known. There are many items that should be disclosed, and it's probably not possible to attempt to name them all on a form. That's why there is the section for the seller to disclose, "What Other Material (important) information are you aware of..."
There is plenty of advice and instruction for sellers in the Sellers Advisory, the Purchase Contract, and the SPDS form itself. And at the very top of the SPDS form is this statement: "WHEN IN DOUBT - DISCLOSE".
There is also case history that is available to read:
Quote:
"Where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer." Hill v. Jones, 151 Ariz. 81, 85, 725 P.2d 1115 (App. 1986).
A material fact is defined as "one to which a reasonable person would attach importance in determining his choice of action in the transaction in question." Hill v. Jones, 151 Ariz. 81, 85, 725 P.2d 1115 (App. 1986). In other words, if a reasonable party would attach importance to a particular fact in deciding whether or not to enter a transaction, then the fact is material.
Some examples of material facts include
(1) whether the property is infested with termites,
(2) whether a room addition complies with the building code,
(3) whether a parcel of land can be developed,
(4) whether a house is in a quiet neighborhood,
(5) whether a property has city light views,
(6) whether a parcel of land has access, (7) whether a water well is contaminated, and
(8) whether property is on septic tank or sewer.
In general, if a seller knows a material fact about a property that a buyer does not know and cannot readily observe, then the fact must be disclosed to the buyer.
Such disclosure is often made in a Seller's Property Disclosure Statement, however, it can be made in any other written form as well. Disclosure should be timely, i.e., provided far enough in advance of closing to allow the buyer to act on it.
Most importantly, the seller should be told that disclosure is a legal requirement, not an exercise in altruism.
While the law allows the disclosure to be made in any type of writing, the AAR Purchase Contract requires a SPDS, unless amended by both buyer and seller.
This thing seems silly. There is no way to prove the existence of a ghost. If the seller told me they thought there was a ghost in their house, I'd ask what evidence they had. If they said things turned on by themselves or there were weird banging sound or something, I'd be more worried about a horribly wired house or bad plumbing and possible leaks, not a ghost. If they said they saw one, I'd think they were gullible or insane and maybe I could get a few more bucks off the price.
It seems silly to you because you are not a believer in ghosts, and the fact that someone says there are ghosts would not bother you. There are plenty of people that share your opinion.
There is another camp that wouldn't consider living in a home where someone said it had ghosts. That's evident by the law suit cited in the original post.
The main point of the discussion is that all material facts must be disclosed to the buyer so the buyer can decide if they want to buy this house or not.
Also, it was to make known that "ghosts" are not treated the same as a "death on the premises". Many have made the mistaken assumption that a ghost died on the premises, therefore does not have to be disclosed. That is a false assumption.
I basically agree with Captain Bill's comments on disclosure requirements.
However, I just want to point out and clarify that the AZ Realtor SPDS form itself is not required by AZ law. It is made available to provide guidance to the seller on what should be considered for disclosure and as a vehicle for providing disclosure to the buyer. Any other form of disclosure can be used by the seller as long as the seller meets the requirement to disclose known material facts.
So specific wording in the SPDS such as "might affect" is not stated in AZ law, but is an interpretation by the AZ Association of Realtors legal team as to what the law may require.
Thanks for pointing that out. It is correct that the SPDS is not required by law, and one can use any writing. However, we should further clarify that the AAR Purchase Contract does require the SPDS (unless amended by buyer and seller).
I think the reason the "might affect" is there is because not everyone will see the same object as material. As someone just posted, the sighting of "ghosts" would have no affect on him/her. But it would on others; and both the poster for whom it would not affect, and for others whom it would, are both reasonable persons with different viewpoints.
A material fact is defined as "one to which a reasonable person would attach importance in determining his choice of action in the transaction in question." Hill v. Jones, 151 Ariz. 81, 85, 725 P.2d 1115 (App. 1986). In other words, if a reasonable party would attach importance to a particular fact in deciding whether or not to enter a transaction, then the fact is material.
While I appreciate the association of realtors trying to protect themselves by creating the SPDS form, I don't believe it does anything to protect the (selling) client, and anyone who bought a house in the past few years from a bank didn't get the courtesy of a spds form themselves.
The law requires disclosure of material facts, not irrelevant factoids like how far away the nearest airport is (if it isn't material).
.
The SPDS was not made to protect Realtors. It was designed to assist Sellers to comply with the AZ disclosure law. It may not be perfect, but as my wife would say about me, it's better than nothing.
The presence of an airport in the vicinity is not irrelevant. It is extremely important to many people. That's why in the Luke AFB area, Realtors who are on duty there are REQUIRED to carry a map of the airport flight pattern; and buyers are required to sign a form disclosing the presence of the airport.
The airport disclosure protects the buyer, but also protects the seller from someone buying a home then later suing because they were not told there is an airport nearby.
The Realtors still have plenty of responsibility:
Quote:
"The broker as a fiduciary has a duty to learn the material facts that may affect the principal's decision. He is hired for his professional knowledge and skill; he is expected to perform the necessary research and investigation in order to know those important matters that will affect the principal's decision, and he has a duty to counsel and advise the principal regarding the propriety and ramifications of the decision.
The agent's duty to disclose material information to the principalincludes the duty to disclose reasonably obtainable material information.
The facts that a broker must learn, and the advice and counsel required of the broker, depend on the facts of each transaction, the knowledge and experience of the principal, the questions asked by the principal, and the nature of the property and the terms of sale.
The broker must place himself in the position of the principal and ask himself the type of information required for the principal to make a well-informed decision. This obligation requires investigation of facts not known to the agent and disclosure of all material facts that might reasonably be discovered." Field v. Century 21 Klowden-Forness Realty, 63 Cal.App.4th 18, 25-26, 73 Cal.Rptr.2d 784 (1998) (internal citations omitted).
I'm aware of the law but what I'm trying to educate readers on is the distinction between citing a law and proving it in an actual court and seeking damages. You need a lot more than a neighbor's verbal testimony.
If you're aware of the law, then you're aware of the Rules of Evidence that addresses heresay, and therefore you're aware that there are exceptions to heresay not being allowed; and that the witness statement does not have to stem from a writing from the defendant.
One major misconception about the hearsay rule is that hearsay is never admissible in court. While the general rule is that such evidence is inadmissible, there are many exceptions such as this:
If the significance of an offered statement lies solely in the fact that it was made, no issue is raised as to the truth of anything asserted, and the statement is not hearsay.
In the civil law system, the courts, whether consisting only of judges or featuring a jury, have wide latitude to appreciate the evidence brought before them.
Here’s an example:
When an assertion is offered into evidence against the defendant and the defendant objects, “hearsay,” the defendant is in essence saying “I object to this statement as untrustworthy because I am not afforded an opportunity to cross-examine the person who made it. How can we trust what he said?”
But what if the defendant is the person who made the statement that is now being offered against him?
To object, “hearsay” in this circumstance would be as absurd as to argue, “This statement is unreliable because I cannot cross-examine myself; therefore, how can I trust what I said?”
In this situation the objection of the Hearsay rule falls away, because the very basis of the rule is lacking, viz. the need and prudence of affording an opportunity of cross-examination.
Another way of looking at it is that a defendant who faces his own statement being used against him has an opportunity to cross-examine himself – he can take the witness stand and explain his prior assertion, so the rule is satisfied.
The witness who is informing the court what the defendant stated can also be cross examined.
Quote:
quote=azriverfan....Readers need to be aware that lawsuits are not something trivial. It costs thousands of dollars to hire a REPUTABLE attorney. The length of the process can take months to years which adds to the cost. And then you have to account for the lost opportunity costs in pursuing a case (mental stress, time away from work and other obligations).
I agree, and I think most people are acutely aware of the high cost of hiring an attorney, whether REPUTABLE or not.
Quote:
quote=azriverfan....Does someone really want to just sue someone when the only piece of evidence they have is a neighbor claiming the defendant told him the house is haunted?
That's really up to the buyer isn't it?
Quote:
quote=azriverfan.... In all likelhihood, you will pay an attorney a lot of money to review the case and then it will likely be thrown out.
When you examine the Rules of Evidence that statement is probably incorrect snce we're talking about a seller who fails to disclose that he has ghosts in the house, but has told his neighbors(s) about their existence.
Quote:
quote=azriverfan....The point of this is people need to take due diligence to research these matters ahead of time because in essence it is buyer beware.
It is absolutely not buyer beware. That went out long ago. That's why we have laws of disclosure.
It is correct that the Buyer is charged with doing their due diligence, and there is a 13 page Buyers Advisory to provide guidance in performing the due diligence. However, there are things that the buyer cannot, and is not held responsible to inspect for, (such as the presence of ghosts) and there is no requirement for them to inspect for poltergeist.
Additionally the Seller is required by law to disclose all known material facts about the property to the buyer, and is provided a Seller Property Disclosure Form for that purpose. The Seller cannot defend himself by saying that the buyer didn't ask about ghosts. The buyer is not obligated to look inside walls, or to look into the mind of the seller to determine what lies therein.
Quote:
quote=azriverfan....No one likes to hear that but depending on the courts to rescue you if you get into a bind is not practical. Unless you have a significant amount of objective evidence showing the seller knowingly withheld information about a ghost in a home, you are going to waste a lot of time and money trying to pursue this in the courts.
A buyer resorts to the courts when other avenues to the solution of a dispute fail. That's what courts are for. If a Seller were to rely on that information and decided s/he can elect to not disclose the presence of ghosts (that he has informed neighbor(s) about), because he's under the impression that the buyer won't dare sue him because of the cost, then he would be terribly misguided.
The advice to all Sellers should be exactly what is on the top of the SPDS page. "WHEN IN DOUBT - DISCLOSE". If your Realtor knows about it, then s/he is required to disclose it.
Here is the procedure for dispute resolution as stated in the AAR Purchase Contract:
In accordance with the Alternate Dispute Resolution: Mediation, with both parties sharing the cost.
Binding Arbitration (One or both parties may opt out and proceed to court, if within 30 days after Mediation)
Exclusion to the ADR: Small claims court up to $2,500
The prevailing party in any dispute shall be awarded their reasonable attorney fees and costs (which also include arbitration costs).
Is all of this passion really warranted for the topic of haunted houses in Phoenix? I mean, it's January, not Halloween. I think you're both beating a dead ghost here. Just my unofficial opinion.
Is all of this passion really warranted for the topic of haunted houses in Phoenix? I mean, it's January, not Halloween. I think you're both beating a dead ghost here. Just my unofficial opinion.
Good point. We'll have to revisit this thread next Halloween
The reason I brought up the subject is that I recently learned that so many people are under incorrect impressions on that particular ghostly subject . The major lesson here is really about the Duty to Disclose, and the possible repercussions for failing to disclose any material fact that can affect a buyers decision.
I think Azriverfans argument is valid because everyone should think twice about taking on legal action.
We seem to just disagree on what can be considered evidence; and this would hold true for any type of failure to disclose.
Zippymans argument is also valid even though he sees disclosure from a different vantage point.
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subject . The major lesson here is really about the Duty to Disclose, and the possible repercussions for failing to disclose any material fact that can affect a buyers decision. 
