Documents a Buyer Should Review
The documents listed below may not be relevant in every transaction, nor is the list exhaustive. Unless otherwise stated, the real estate agent has not independently verified the information contained in these documents.
Arizona Association of Realtors Purchase Documents
Buyers should protect themselves by taking the time to read the real estate purchase contract and understand their legal rights and obligations before they submit an offer to buy a property. Sample residential transaction forms:
Residential Resale Real Estate Purchase Contract ~ 02/11
Additional Compensation Consent ~ 5/05
Affidavit of Disclosure Information
Buyer-Broker Exclusive Employment Agreement ~ 02/10
Residential Buyer’s Inspection Notice and Seller’s Response (BINSR) ~ 02/11
Lead-based Paint Disclosure – Sales ~ 2/09
Pre-Qualification Form ~ 02/11
Real Estate Agency Disclosure & Election ~ 2/09
Residential Seller’s Property Disclosure Statement with Seller Advisory ~ 8/10
Short Sale Addendum to the Residential Resale Real Estate Purchase Contract ~ 02/11
MLS Printout
A listing is an agreement between the seller and the listing broker and may authorize the broker to submit information to the Multiple Listing Service (“MLS”). The MLS printout is similar to an advertisement. Neither the listing agreement nor the printout is a part of the purchase contract between the buyer and seller. The information in the MLS printout was probably secured from the seller, the builder, or a governmental agency, and could be inaccurate, incomplete or an approximation. Therefore, the buyer should verify any important information contained in the MLS.
The Subdivision Disclosure Report (Public Report)
A Subdivision Disclosure Report (Public Report) is intended to point out material information about a subdivision. Subdividers (any person who offers for sale or lease six or more lots in a subdivision or who causes land to be divided into a subdivision) are required to give buyers an ADRE Public Report. Read the Public Report before signing any contract to purchase property in a subdivision. Although some of the information may become outdated, subsequent buyers can also benefit from reviewing the Public Report. Public Reports dating from January 1, 1997, are available on the ADRE website at http://services.azre.gov/publicdatabase/SearchDevelopments.aspx. The ADRE does not verify the information in the Public Report therefore the Report could be inaccurate so it should be verified. For additional information, go to www.azre.gov/PublicInfo/PropertyBuyerChecklist.aspx
Seller’s Property Disclosure Statement (“SPDS”)
Most sellers provide a SPDS. This document poses a variety of questions for the seller to answer about the property and its condition. The real estate broker is not responsible for verifying the accuracy of the items on the SPDS; therefore, a buyer should carefully review the SPDS and verify those statements of concern. View sample SPDS forms at www.aaronline.com/ForRealtors/Forms/. Also review www.azre.gov/PublicInfo/PropertyBuyerChecklist.aspx
Covenants, Conditions and Restrictions (“CC&Rs”)
The CC&Rs are recorded against the property and generally empower a homeowner’s association to control certain aspects of property use within the development. By purchasing a property in such a development, the buyer agrees to be bound by the CC&Rs. The association, the property owners as a whole, and individual property owners can enforce the contract. It is essential that the buyer review and agree to these restrictions prior to purchasing a property. See www.realtor.com/BASICS/condos/ccr.asp. The ADRE advises: “Read the deed restrictions, also called CC&Rs (covenants, conditions and restrictions). You might find some of the CC&Rs are very strict.” www.azre.gov/PublicInfo/PropertyBuyerChecklist.aspx. Buyers should consult legal counsel if uncertain of the application of particular provisions in the CC&Rs.
Homeowner’s Association (“HOA”) Governing Documents
In addition to CC&Rs, HOAs may be governed by Articles of Incorporation, Bylaws, Rules and Regulations, and often architectural control standards. Read and understand these documents. Also, be aware that some HOAs impose fees that must be paid when the property is sold, so ask if the purchase of the property will result in any fees. Condominium and planned community HOAs are regulated by Arizona statutes; however, they are not under the jurisdiction of the Department of Real Estate. If you have questions about your rights and remedies regarding homeowner’s associations or community associations, read the information provided at www.azre.gov/PublicInfo/RealEstateResearchTopics.aspx#LINK11 or Chapter 16 and 18 of the Arizona Revised Statutes – Title 33 www.azleg.state.az.us/ArizonaRevisedStatutes.asp?Title=33
HOA Disclosures
If purchasing a resale home in a condominium or planned community, the seller (if fewer than 50 units in the community) or the HOA (if there are 50 or more units) must provide the buyer with a disclosure containing a variety of information. See www.azleg.state.az.us/ars/33/01260.htm and www.azleg.state.az.us/ars/33/01806.htm for the laws detailing these requirements.
Title Report or Title Commitment
The title report or commitment contains important information and is provided to the buyer by the title/escrow company or agent. This report or commitment lists documents that are exceptions to the title insurance (Schedule B Exceptions). Schedule B Exceptions may include encumbrances, easements, and liens against the property, some of which may affect the use of the property, such as a future addition or swimming pool. Make sure you receive and review all of the listed documents.
Questions about the title commitment and Schedule B documents may be answered by the title or escrow officer, legal counsel, or a surveyor. General information regarding title issues may be found at www.alta.org/consumer/questions.cfm. For information on title insurance, visit the Arizona Department of Insurance website at www.id.state.az.us/consumerautohome.html#titleresource.
Loan Documents
Unless a buyer is paying cash, the buyer must qualify for a loan in order to complete the purchase. A buyer should complete a loan application with a lender before making an offer on a property if at all possible and, if not, immediately after making an offer. It will be the buyer’s responsibility to deposit any down payment and insure that the buyer’s lender deposits the remainder of the purchase price into escrow prior to the close of escrow date. Therefore, make sure you get all requested documentation to your lender as soon as possible. For information on loans and the lending process, visit the following websites:
Ginnie Mae: www.ginniemae.gov/ypth/index.asp?Section=YPTH
HUD: www.hud.gov/
Mortgage Bankers Assoc.: www.homeloanlearningcenter.com/default.htm
National Assoc. of Mortgage Brokers: www.namb.org/namb/Home_Buyers_Home.asp?SnID=382338594
Home Warranty Policy
A home warranty may be part of the sale of the home. Buyers should read the home warranty document for coverage and limitation information. Be aware that pre-existing property conditions are generally not covered under these policies.
Affidavit of Disclosure
If the buyer is purchasing five or fewer parcels of land (whether improved or vacant), other than subdivided land, in an unincorporated area of a county, the seller must furnish the buyer with an Affidavit of Disclosure. A sample form is located at www.aaronline.com/documents/affidavit.aspx.
Lead-Based Paint Disclosure Form
If the home was built prior to 1978, the seller must provide the buyer with a lead-based paint disclosure form. Information about lead-based paint may be obtained at www.azre.gov/PublicInfo/RealEstateResearchTopics.aspx#LINK11 or www.epa.gov/lead/. Buyer is further advised to use certified contractors to perform renovation, repair or painting projects that disturb lead-based paint in residential properties built before 1978 and to follow specific work practices to prevent lead contamination. For more information on this new rule, visit www.epa.gov/lead/pubs/lscp-press.htm.
Professional Inspection Report
The importance of having a property inspected by a professional inspector cannot be over-emphasized. An inspection is a visual physical examination, performed for a fee, designed to identify material defects in the property. The inspector will generally provide the buyer with a report detailing information about the property’s condition. The buyer should carefully review this report with the inspector and ask the inspector about any item of concern. Pay attention to the scope of the inspection and any portions of the property excluded from the inspection. A list of certified home inspectors may be found at the Arizona Board of Technical Registration website, www.btr.state.az.us. Additional information on inspections may be found at www.ashi.com, and guidance on hiring a home inspector may be found at www.realtor.com/basics/buy/inspnegot/hire.asp?gate=realtor&poe=propertystore
County Assessors/Tax Records
The county assessor’s records contain a variety of valuable information, including the assessed value of the property for tax purposes and some of the physical aspects of the property, such as the reported square footage.
The date built information in the assessor’s records can be either the actual or effective/weighted age if the residence has been remodeled. All information on the site should be verified for accuracy. Information is available on county websites:
Coconino: www.coconino.az.gov/
Maricopa: www.maricopa.gov/assessor or http://treasurer.maricopa.gov/parcels/
Pima: www.asr.pima.gov/
Yavapai: www.co.yavapai.az.us/
Other counties: www.az.gov/webapp/portal
Termites and Other Wood Destroying Insects and Organisms
Termites are commonly found in some parts of Arizona. The Office of Pest Management (OPM) regulates pest inspectors and can provide the buyer with information regarding past termite treatments on a property. To obtain a termite history report on a property, visit the OPM website at http://tarf.sb.state.az.us/ or call 1-800-223-0618. The OPM publication, What You Should Know about Wood-Destroying Insect Inspection Reports, can be found at www.sb.state.az.us/TermiteInsp.php. Additional information may be obtained at the OPM website at www.sb.state.az.us/index.php.
