PdfConvertShort Sale Seller Advisory - 03/2016

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The Short Sale Seller Advisory is a Resource

A short sale is a real estate transaction in which the sales price is insufficient to pay the loan(s) encumbering the

BEFORE PROCEEDING WITH A SHORT SALE

UNDERSTAND A LENDER’S OPTIONS UPON LOAN

There are many types of loans that are secured by real property.

https://www.aaronline.com/2009/09/loan-defaults-deficiencies/

Provided by the Arizona Association of REALTORS®

property in addition to the costs of sale and the seller is unable to pay the difference. A short sale involves numerous

issues as well as legal and financial risks. This Advisory is designed to address some of these issues and risks, but does

not purport to be comprehensive.

1.

DEFAULT

These may be purchase loans, refinanced loans, home-equity

loans, or one of the various other types of loans. The type of loan

and type of property will determine what remedies a lender may

have if the homeowner fails to make the agreed upon payments.

The available remedies, the homeowner’s overall current or

potential future financial strength, the lender’s cost in acquiring

the loan and any shared-loss or similar agreement if the loan was

acquired by purchase or merger, are some of the many factors

that the lender may consider in deciding how to proceed when a

loan is in default. For an overview of these issues, go to

http://1.usa.gov/1RczXBN

2. BE AWARE OF PREDATORY “RESCUE” SCAMS & SHORT

SALE FRAUD

Homeowners worried about foreclosure may be susceptible to

predatory “rescue” scams which may cost you money with no

results, result in the loss of your home entirely, or involve you in a

fraudulent scheme. For more information, go to:

http://bit.ly/1Ogg1Ib or http://bit.ly/21MB8vF

Red Flags” of fraudulent schemes include:

• Guarantees to stop the foreclosure

• Large upfront fees

• Instructions not to contact the lender

• Transfer of title or lease of the property

• The proposed buyer is an LLC

• Requests that the homeowner execute a power of

attorney

The proposed buyer, at the buyer’s sole expense,•

retains a third party to negotiate the short sale

for the seller’s benefit.

3. REPORT SUSPECTED SCAMS

• Financial Fraud Enforcement Task Force

www.stopfraud.gov/

• HUD, in partnership with the Loan Modification Scam

Prevention Network www.preventloanscams.org/

• Arizona Department of Financial Institutions at

http://azdfi.gov/ or email [email protected]

• Arizona Attorney General’s Office

http://bit.ly/1XWEKf2

Page | 1 of 6 Arizona Department of Real Estate Short Sale Seller Advisory (March 2016)Garden Brook Realty, 520 W Sheldon Street Suite 2A Prescott, AZ 86301

Diann Dede Erceg928-710-0020 Advisory 928-227-2654


BEFORE PROCEEDING WITH A SHORT SALE(CONTINUED)

4. CONTACT A FREE HUD-APPROVED HOUSING COUNSELOR

OR CONTACT YOUR LENDER DIRECTLY

Contact a HUD-approved housing counseling agency online or call

(800) 569-4287 or TDD (800) 877-8339 for advice on your options.

For additional HUD resources, go to:

http://1.usa.gov/1rG3J4N , http://1.usa.gov/1RGTrxD or

http://1.usa.gov/YDHdxS

• Contact the Neighborhood Assistance Corporation of

America at

https://www.naca.com/home-save/

• Contact the lender directly. To find the lender’s contact

information, check the loan billing statement, or coupon

book. Ask for the lender's home retention department,

loss mitigation department, (or other department that

handles negotiation of loans in default); explain the

situation and find out if the lender is willing to discuss

options.

5. UTILIZE FREE SERVICES AVAILABLE TO ARIZONA

RESIDENTS

• Contact the Arizona Foreclosure Helpline at 1-877-448-

1211 or visit

http://bit.ly/1GIVQls

• Review the Arizona Foreclosure Prevention Task Force

Workbook. This book will help you evaluate your options

and provide you with tools to take action.

• Arizona Department of Housing

www.azhousing.gov/

6. OBTAIN LEGAL ADVICE

An attorney can advise you about your options and legal liability.

• To find out if you are eligible for free or low cost legal

assistance, contact a legal aid organization in your county

or one of the organizations listed at

http://bit.ly/1lUlg9q

www.azlawhelp.org/housing.cfm

Page | 2 of 6 Arizona Department of Real Estate Short Sale Seller Advisory (March 2016)

• Contact the Lawyer Referral Service in your county where

you can consult with an attorney for a small fee for a half-

hour consultation.

Maricopa County:

http://maricopalawyers.org/ or (602) 257-4434.

Pima County:

http://www.pimacountybar.org/ or (520) 623-4625

• Attorneys who are State Bar Real Estate Law Certified

Specialists can be located at

www.azbar.org/LegalResources/findspecialist.cfm .

7. OBTAIN TAX ADVICE

• IRS Self Help or contact a local IRS office

https://www.irs.gov/Help-&-Resources

• Attorneys who are State Bar Tax Law Certified Specialists

can be located at

www.azbar.org/LegalResources/findspecialist.cfm

8. BE AWARE OF THE CONSEQUENCES OF COMMITTING

“WASTE”

Damaging the property or removing fixtures such as sinks, toilets,

cabinets, air conditioners, and water heaters may result in liability

to the lender for “waste.” In other words, the lender may be able

to sue you for damages if you have physically abused, damaged or

destroyed any part of the property.

http://1.usa.gov/1OTz8ug

Advisory


1. LOAN WORKOUT

• Reinstatement:

Paying the total amount owed by a specific date in

exchange for the lender agreeing not to foreclose.

• Forbearance:

An agreement to reduce or suspend payments for a short

period of time.

• Repayment Plan:

An agreement to resume making monthly payments with

a portion of the past due payments each month until they

are caught up.

• Claim Advance/Partial Claim:

If the loan is insured, a homeowner may qualify for an

interest-free loan from the mortgage guarantor to bring

the account current.

2. LOAN MODIFICATION

The lender may agree to change the terms of the original loan to

make the payments more affordable. For example, missed

payments can be added to the existing loan balance, the interest

rate may be modified or the loan term extended. Loan

modification resources include:

• Know Your Options:

http://knowyouroptions.com/modify/modification

• Making Homes Affordable:

www.makinghomeaffordable.gov

• Homeownership Preservation Foundation:

www.995hope.org or call 1-888-995-HOPE™ Hotline

3. REFINANCE

If the lender will not agree to a loan workout or

modification, the homeowner may be able to refinance

the loan with another lender.

Learn more at

http://1.usa.gov/1RIyKBF

4. DEED-IN-LIEU OF FORECLOSURE

The lender may allow a homeowner to “give back” the

property. This option may not be available if there are

other liens recorded against the property. Review the

Deed in Lieu of Foreclosure FAQ’s from HUD at

http://1.usa.gov/1NkOzch

5. WORK OUT SALE

The lender may allow a specific amount of time for the home to be

sold and the loan to be paid off. The lender may also allow a

buyer to assume the loan to purchase the property even if the

loan is non-assumable.

6. BANKRUPTCY

If you are considering bankruptcy as an option, consult with an

attorney that specializes in bankruptcy cases:


Access the Arizona Bankruptcy Court self-help information at

http://www.azb.uscourts.gov/ or call 1-866-553-0893

7. FORECLOSURE

Allowing the lender to foreclose is another option. The

counselors at the Arizona Foreclosure Help Line can

explain the foreclosure process

http://1.usa.gov/1OTz8ug or call 1-877-448-1211

Ultimately, only you and your attorney can decide if

foreclosure is the best option for you. Attorneys who are

State Bar Real Estate Law Certified Specialists can be

located at


Ask your attorney about the possibility of a deficiency lawsuit after

foreclosure. Assuming all statutory requirements are met, the

foreclosure, even if the amount due to the lender exceeds the

value of the property. Also, seek professional tax advice about the

Arizona anti-deficiency statutes may limit the lender’s remedy to

consequences of a foreclosure and review the IRS information at

https://www.irs.gov/Help-&-Resources

OPTIONS OTHER THAN SHORT SALECONSIDER ALL OPTIONS

A SHORT SALE MAY NOT BE YOUR BEST COURSE OF ACTION.

CONSIDER ALL YOUR OPTIONS BEFORE MAKING A DECISION.


Advisory


SHORT SALE CONSIDERATIONS

IF YOU DECIDE TO PURSUE A SHORT SALE,

CONSIDER TAKING THE FOLLOWING ACTIONS

1. CONTACT A QUALIFIED REAL ESTATE PROFESSIONAL

Interview several real estate professionals and ask about their

experience in short sales, the number of short sale transactions

that they have handled, and their education and training in short

sales.

• Review the real estate professional’s background and

continuing education on the ADRE website at

http://services.AZRE.gov/publicdatabase

• Ask if the real estate professional has obtained a short

sale certification, such as the Short Sales and Foreclosure

Resource Certification (“SFR”)www.realtorsfr.org/ .

• Find a REALTOR® at www.aaronline.com/

2. INVESTIGATE DOCUMENTATION AND ELIGIBILITY

Documentation and eligibility criteria for short sales vary

depending on specific lender and investor guidelines. Generally,

you must prove that you are financially incapable of paying the

loan and the lender is convinced that it will fare better by agreeing

to a sale for less than the outstanding loan amount than

foreclosing.

3. DETERMINE THE AMOUNT OWED ON THE PROPERTY

All debt and costs must be factored in before determining whether

a short sale is feasible. Consider the delinquent loan, home equity

loan or other loans recorded against the property, past due

homeowner’s association fees, unpaid property taxes and the

costs of a sale, such as closing costs, escrow fees and brokerage

commissions. If you have more than one loan on the property, be

aware that a short sale will generally require the approval of all

lenders.

5. CONSULT LEGAL COUNSEL

The importance of competent legal counsel to help you determine

whether a short sale is the best option and to advise you during

the short sale process cannot be over emphasized. See the legal

resources listed on page 2 or visit www.azbar.org.

6. UNDERSTAND THAT A SHORT SALE MAY NOT

DISCHARGE THE DEBT

Even if a lender agrees to a short sale, the lender, the VA,

or the FHA may not agree to forgive the debt entirely and

may require you to pay the difference as a personal

obligation. This outstanding personal obligation could

result in a subsequent collection action. For example, a

lender may accept the short sale purchase price to

“release the lien” on the property as opposed to agreeing

to accept the purchase price as “full and final settlement

of the debt” on the property. Therefore, be certain of the

terms of any short sale before making a decision, consult

an attorney regarding whether the lender is entitled to

pursue a deficiency judgment and obtain any debt

forgiveness agreements with the lender in writing.

7. OBTAIN TAX ADVICE

A short sale in which the debt is forgiven is a relief of debt and

may be treated as income for tax purposes. The Mortgage

Forgiveness Tax Relief Act of 2015 created a limited exemption to

allow homeowners to pay no taxes on debt forgiveness; however,

only cancelled debt used to buy, build or improve a principal

residence or refinance debt incurred for those purposes qualifies

for this tax exemption. For more information on the tax

consequences of debt relief seek professional tax advice and go to

https://www.irs.gov/uac/Home-Foreclosure-and-Debt-Cancellation.

8. BE AWARE OF THE IMPACT ON YOUR CREDIT SCORE

The impact of a short sale on your credit score depends upon a

variety of factors, including late or missed payments. A short sale

may appear on your credit report as “pre-foreclosure

redemption,” “paid in full for less than full balance” or other

similar term.

9. UNDERSTAND THAT THERE MAY BE A WAITING PERIOD

Your ability to qualify for a loan to purchase another home after a

short sale will likely be impacted by a short sale and there may be

a waiting period before you can purchase another home.

BEFORE YOU CAN BUY ANOTHER HOME

4. DETERMINE THE ESTIMATED FAIR MARKET VALUE OF

You must prove to the lender that the home is worth less than the

unpaid loan balance. Consult a real estate professional or an

THE PROPERTY

appraiser for assistance in estimating the value of the property.


Advisory


SHORT SALE CONSIDERATIONS(CONTINUED)

10. HOME AFFORDABLE FORECLOSURE ALTERNATIVE

The HAFA program was designed to give homeowners different

alternatives to a foreclosure, which include incentives for

completing a short sale. For more information on the options

(HAFA) PROGRAM

available, visit the HAFA program website

http://1.usa.gov/1IHWsvD

• To find out which option you may be eligible for, go to

http://1.usa.gov/1SSg3Ka

• To find out if your mortgage company participates in the

HAFA program, go to

http://1.usa.gov/1XZVGkJ

11. REVIEW THE ARIZONA ASSOCIATION OF REALTORS®

(AAR) SHORT SALE FORMS

AAR has developed the following contract forms to assist you in a

short sale transaction. Review these contract forms and any other

forms you are asked to sign, so that you thoroughly understand

your rights and obligations.

• Short Sale Addendum to the Listing Contract

http://bit.ly/1SQQl8W

• Short Sale Addendum to the Arizona REALTORS®

Residential Resale Sale Purchase Contract

http://bit.ly/1n1Jm29

For More Information, visit

AAR’s Consumer Foreclosure Assistance Links:

www.aaronline.com/2013/01/consumer-assistance-foreclosure/


Advisory


SELLER ACKNOWLEDGMENT

Seller acknowledges receipt of all six pages of this

Advisory and further acknowledges that there may

be other issues of concern not listed herein. The

information in this Advisory is provided with the

understanding that it is not intended as legal or

other professional services or advice. These

materials have been prepared for general

informational purposes only. The information and

links contained herein may not be updated or

revised for accuracy. If you have any additional

questions or need advice, please contact your own

lawyer.

Short Sale Seller Advisory

A Resource for

Real Estate Consumers

Provided by the

^ SELLER SIGNATURE DATE

^ SELLER SIGNATURE DATE


Advisory

SAMPLE

SAMPLE

The Tenant Advisory is a Resource

Residential Lease Agreement

Tenants should protect themselves by taking the time to read the


Provided by the Arizona Association of REALTORS®

COMMON DOCUMENTS A TENANT SHOULD REVIEW

Residential Rentals are required to comply with the Arizona Residential Landlord/Tenant Act:

Verification of Ownership

Prior to executing a lease agreement or conveying any money, tenants should independently verify the owner of the property

and confirm that they are contracting with the owner of record. If a person other than the owner signs the lease agreement,

tenants should verify that the third party has authority to act on the owner's behalf. Information regarding property ownership

Prior to executing a lease agreement or conveying any money, tenants should independently verify the owner of the property

residential lease agreement and understand their legal rights and

obligations before they enter into a lease agreement. Click to view

a sample of the agreement:

Residential Lease Owner’s Property Disclosure

Many landlords provide a RLOPDS. This document poses a variety

of questions for the owner to answer about the property and its

condition. The property manager/broker is not responsible for

verifying the accuracy of the items on the RLOPDS; therefore, a

Statement (RLOPDS)

tenant should carefully review the RLOPDS and verify those

statements of concern. Click to view a sample of the RLOPDS.

Homeowners Association (HOA) Governing Documents

If CC&Rs are recorded against the property, the tenant

In addition to CC&Rs, HOAs may be governed by Articles ofIncorporation, Bylaws, Rules and Regulations, and oftenarchitectural control standards. Read and understand these

documents. Also, be aware that some HOAs impose fees. Tenants

with questions about their rights and remedies regarding

homeowners associations or community associations should read

the information provided at

Lead-based Paint Disclosure Form

If the home was built prior to 1978, the landlord must provide the

tenant with a lead-based paint disclosure form. Information about

lead-based paint may be obtained at Arizona Department of Real

Move-in/Move-out Inspection

The importance of inspecting the property at the time of moving in

cannot be over-emphasized. The tenant is encouraged to fill out a

move-in/move-out checklist to identify material defects in the

property within the stated timeframe. A sample of AAR’s Move-

in/Move-out Condition Checklist can be viewed at:

. Tenants should keep a copy of the checklist

http://1.usa.gov/1DcWQKx

https://www.aaronline.com/2015/07/arizona_county_assessors/

1.

http://bit.ly/1GcMWZq.

2.

http://bit.ly/20CtjGM.

3.

agrees to follow the CC&Rs. It is essential that the tenant

review and agree to these restrictions prior to leasing a

property. The Arizona Department of Real Estate (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.”

http://www.azre.gov/PublicInfo/RealEstateResearchTopics.aspx

or Chapters 16 and 18 of the Arizona Revised Statues – Title 33:

http://www.azleg.state.az.us/arizonarevisedstatutes.asp?Title=33

4.

Estate: http://bit.ly/1LWSiz9 or http://www2.epa.gov/lead .

5.

http://bit.ly/23FE1OQ

for their records and may also want to take photographs of any

damage observed at the time of move-in.

Page | 1 of 4 Arizona Association of REALTORS® Tenant Advisory (March 2016)

following: .

.

Advisory

Repairs and Property Condition

Pursuant to Arizona law, the landlord is generally responsible for


ensuring that all “electrical, plumbing, sanitary, heating,

ventilating, air-conditioning and other facilities and appliances,

including elevators, supplied or required supplied by him” be in

Access to the Property by Landlord or Landlord’s

Unless the tenant requests repairs in writing, the landlord must

give the tenant at least two days notice to enter the property,

during reasonable hours, to make repairs, conduct inspections,

have services completed or exhibit the property to prospective

Representative

purchasers and tenants. The landlord has the right to immediately

to, monthly rent. A holdover tenant is someone who stays in the

lease property after the express term of the lease has expired. The

landlord can choose to evict a holdover tenant or allow the tenant

Notice

Unless otherwise agreed, all notices shall be sent registered or

certified mail, or personally delivered. A.R.S. §33-1313.

good and safe working order and condition. A.R.S. §33-1324. It is

the landlord’s responsibility to make sure that necessary repairs

are made to keep the property in a fit and livable condition. It is

the tenant’s responsibility to notify the landlord of any/all

enter the premises in the event of an emergency or by court

order. A.R.S. §33-1343.

Deposits/Fees

Termination of the Lease

Unless the parties desire for the lease agreement to continue,

written notice of intent not to renew the lease agreement shall be

issued pursuant to the terms of the lease. If the lease continues on

a month-to-month basis, absent prior written agreement, either

the lease owner or the tenant may terminate by providing 30-days

written notice prior to the periodic rental date (i.e. the date on

which rent is due) per A.R.S. §33-1375(B).

If the tenant vacates the property before the lease expires, they

can still be held responsible for damages, including, but not limited

to continue living in the property on a month-to-month basis

under the terms and conditions of the lease agreement.

1.

2.

necessary repairs. Following proper notice, the landlord has five

days to make any repairs that materially affect the health and

safety of the tenant(s) and 10 days to make any other requested

repairs. NOTE: Pursuant to A.R.S. §33-1324(C), the landlord and

tenant of a single family residence may agree in writing, supported

by adequate consideration, that the tenant will perform the

the landlord’s duties to maintain a fit premises and perform specified

repairs.

3.

4.

The lease agreement should specify which deposits/fees are

refundable and which are not. A landlord is not permitted to

demand refundable security in an amount in excess of one and

one-half month's rent.

be held by the landlord or in a broker's trust account (disclosed in

During the term of the lease, the tenant's security deposit should

writing). At the end of the lease all refundable deposits shall be

refunded to the tenant pursuant to A.R.S §33-1321(G). The

landlord can subtract unpaid rent or repair costs from the security

deposit.

Within 14 business days after termination of the tenancy and

delivery of possession and demand by the tenant, the tenant is

5.

entitled to receive an itemized list of any/all security deposit

deductions together with the amount due and payable to the

tenant. A.R.S §33-1321(D).

6. Foreclosure

The landlord shall not allow the property to become the subject of

a trustee's sale and doing so may place the landlord in breach of

the lease agreement. Nonetheless, a landlord’s failure to pay the

mortgage does not eliminate the tenant’s obligation to pay rent.

To avoid breaching the lease, the tenant should continue paying

rent to the landlord up to the date on which the foreclosure is

completed.

7. Insurance

Tenants are strongly encouraged to obtain renter’s insurance for

their benefit. Pursuant to some lease agreements, certain pets

may require additional insurance coverage. Tenants are

encouraged to contact an insurance professional concerning

additional coverage that may be required.

http://1.usa.gov/1kTWeY8

8. Fair Housing & Disability Laws

The Fair Housing Act prohibits discrimination based on race, color,

national origin, religion, sex, familial status (including children

under the age of 18 living with parents or legal custodians,

pregnant women, and people securing custody of children under

the age of 18), and disability. Visit HUD’s Fair Housing/Equal

Opportunity website at:http://1.usa.gov/1pbD5iW .

For information on the Americans with Disabilities Act, visit

www.usdoj.gov/crt/ada/adahom1.htm


COMMON DOCUMENTS AND DISCLOSURES

.

Advisory


Pests Links to state agencies, city and county websites:

ADDITIONAL INFORMATION ADDITIONAL RESOURCES

Sex Offenders

www.az.gov .

Arizona Tenant’s Rights and Responsibilities Handbook:

http://bit.ly/1uIxt4g

Arizona Department of Real Estate Consumer

www.azre.gov/InfoFor/Consumers.aspx

Find a REALTOR®: www.aaronline.com/realtor-search/.

For information on indoor environmental concerns, the

EPA has a host of resource materials and pamphlets

which are available here.

www.epa.gov/iaq/pubs/index.html .

For crime statistics in all Arizona cities go to:

www.leagueaz.org/lgd/ , click on the city/town and search

for “crime statistics.”

Tenants may find that children cannot attend the school

nearest to the property and may even be transported to

another community. For information about Arizona’s

schools visit: http://www.azed.gov/

U.S. Department of Housing and Urban Development

Housing Choice Vouchers Fact Sheet can be found at the

http://1.usa.gov/1sg4YU3 .

Information regarding Section 8 programs available

through the Arizona Public Housing Authority can be

found at:

Maps for military airports can be found at

http://www.azre.gov/AirportMaps/MilitaryAirports.aspx .

Maps for many of the public airports can be found at:

www.azre.gov/AirportMaps/PublicAirports.aspx .

1.

Bedbugs: Bedbug infestation is on the rise in Arizona and

nationally. For more information on rights and obligations with

respect to bedbugs visit the following websites at

http://bit.ly/1LAcgey , www.cdc.gov/parasites/bedbugs/ or

www.epa.gov/bedbugs/

Scorpions: Information on scorpions may be found at

http://bit.ly/1Ihq9y6

2. Swimming Pools and Spas

Barriers: Each city and county has its own swimming pool barrier

ordinance and tenants should investigate and comply with all

applicable state, county and municipal pool regulations. Pool

barrier contact information for Arizona cities and counties may be

found at:http://bit.ly/20ZG8tp. The Arizona Department of Health

Services Private Pool Safety notice may be found at

http://azdhs.gov/phs/oeh/pool_rules.htm . The state law on

swimming pools is located at

www.azleg.state.az.us/ars/36/01681.htm .

3.

The presence of a sex offender in the vicinity of the property is not

a fact that the landlord or broker is required to disclose. Since June

1996, Arizona has maintained a registry and community

notification program for convicted sex offenders. This information

may be accessed at: http://bit.ly/20CwL4l or through the National

Sex Offender Public Website at: http://1.usa.gov/1SgkQJk . Prior to

June 1996, registration was not required and only the higher-risk

sex offenders are on the website.

•

•

following site:

http://1.usa.gov/1IbQTAh


•

•

•

•

•

•

•

•

•

.

Information: .

.

Advisory


Tenant acknowledges receipt of all four pages of this

TENANT ACKNOWLEDGMENT

Tenant Advisory

A Resource for

Real Estate Consumersadvisory. Tenant further acknowledges that there

may be other disclosure issues of concern not listed

in this advisory. Tenant is responsible for making all

necessary inquiries and consulting the appropriate

persons or entities prior to the leasing of any

property.

The information in this advisory is provided with the

understanding that it is not intended as legal or other

professional services or advice. These materials have

been prepared for general informational purposes

only. The information and links contained herein may

not be updated or revised for accuracy. If you have

any additional questions or need advice, please

contact your own lawyer or other professional

representative.

TENANT SIGNATURE DATE

TENANT SIGNATURE DATE


Advisory

TO ENSURE THAT YOU HAVE THE MOST UP-TO-DATE BUYER

ADVISORY, PLEASE CHECKhttps://www.aaronline.com/manage-risk/buyer-advisory-3/

Phone: Fax:

Produced with zipForm® by zipLogix, 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zipLogix.com

Garden Brook Realty, 520 W Sheldon Street Suite 2A Prescott, AZ 86301928-710-0020 928-227-2654 Diann Dede Erceg

Advisory

This Advisory is supplemental to obtaining professional property inspections. Professional

property inspections are absolutely essential: there is no practical substitute for a professional

inspection as a measure to discover and investigate defects or shortcomings in a property.

Page 1 of 13

A real estate agent is vital to the purchase of

1. Common documents a buyer should review;

REMINDER:

This Advisory is designed to make the purchase of

investigate or verify concerning a property

2. Physical conditions in the property the buyer

3. Conditions affecting the surrounding area that

In addition, a buyer must communicate to the

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Arizona Department of Real Estate Buyer Advisory (August 2017)

Phone: Fax:


A Resource for Real Estate Consumers

real property and can provide a variety of

services in locating a property, negotiating

the sale, and advising the buyer.

discover defects or evaluate the physical

condition of property; however, a real estate

agent can assist a buyer in finding qualified

inspectors and provide the buyer with

documents and other resources containing

vital information about a prospective property.

real property as smooth as possible. Some of the

more common issues that a buyer may decide to

A real estate agent is generally not qualified to

purchase are summarized in this Advisory.

Included in this Advisory are:

should investigate; and

the buyer should investigate.

real estate agents in the transaction any special

concerns the buyer may have about the property

or surrounding area, whether or not those issues

are addressed in this Advisory.

Provided by the Arizona Association of REALTORS®and the Arizona Department of Real Estate

Advisory 928-710-0020 928-227-2654 Diann Dede ErcegGarden Brook Realty, 520 W Sheldon Street Suite 2A Prescott, AZ 86301


Table of Contents

SECTION 1

COMMON DOCUMENTS A BUYER SHOULD REVIEW3 Purchase Contract

Arizona Department of Real EstatePage 2 of 13 Buyer Advisory (August 2017)

3 MLS Printout

3 The Subdivision Disclosure Report

(Public Report)

3 Seller’s Property Disclosure

Statement (SPDS)

3 Covenants, Conditions and

Restrictions (CC&Rs)

4 Homeowner’s Association (HOA)

Governing Documents

HOA Disclosures

Community Facilities District

Title Report or Title Commitment

Loan Information & Documents

Home Warranty Policy

Affidavit of Disclosure

4

4

4

4

4

5

5 Lead-Based Paint Disclosure Form

Professional Inspection Report

County Assessors/Tax Records

Termites and Other Wood

Destroying Insects and Organisms

Foreign Investment in Real Property

Tax Act (FIRPTA)

5

5

5

5

SECTION 2

COMMON PHYSICAL CONDITIONS IN THE PROPERTYA BUYER SHOULD INVESTIGATE

6 Repairs, Remodeling and 7 Water/Well Issues 8 Indoor Environmental Concerns

New Construction

Square Footage

Roof

Swimming Pools and Spas (Barriers)

Septic and Other On-Site

Wastewater Treatment Facilities

Sewer

6

6

6

6

6

(Adjudications, CAGRDs)

Soil Problems

Previous Fire/Flood

Pests (Scorpions, Bed bugs,

Roof Rats, Termites & Bark Beetles)

Endangered & Threatened Species

Deaths & Felonies on the Property

7

7

7

8

8

(Mold, Chinese Drywall, Radon Gas &

Carbon Monoxide, Drug labs, Other)

Property Boundaries

Flood Insurance / Flood Plain Status

Insurance (Claims History)

Other Property Conditions

(Plumbing, Cooling/Heating,

Electrical systems)

8

9

9

9

SECTION 3

CONDITIONS AFFECTING THE AREA SURROUNDINGTHE PROPERTY THE BUYER SHOULD INVESTIGATE

9 Environmental Concerns 10 Freeway Construction 10 Military and Public Airports

(Environmentally Sensitive

Land Ordinance)

Electromagnetic Fields

Superfund Sites

10

10

& Traffic Conditions

Crime Statistics

Sex Offenders

Forested Areas

10

10

10

Zoning/Planning/

Neighborhood Services

Schools

City Profile Report

11

11

11

SECTION 4

OTHER METHODS TO GETTING INFORMATION ABOUT A PROPERTY11 Talk to the Neighbors 11 Drive around the Neighborhood

SECTION 5

RESOURCES12 Market Conditions Advisory 12 Additional Information Services: NATIONAL ASSOCIATION OF

12 Fair Housing & Disability Laws REALTORS®, Arizona Government, Arizona Department of

Real Estate, and Arizona Association of REALTORS®

BUYER ACKNOWLEDGMENT p.13

11 Google Earth

12 Wire Fraud

Advisory

The documents listed below may not be relevant in every transaction, nor is the list exhaustive. Unless otherwise stated,

http://bit.ly/2kpUncL

COMMON DOCUMENTS A BUYER SHOULD REVIEW

Buyers should protect themselves by taking the timeto read the real estate purchase contract andunderstand their legal rights and obligations beforethey submit an offer to buy a property.

Section 1

the real estate broker has not independently verified the information contained in these documents.

1 Purchase Contract

(AAR Sample Residential Resale Purchase Contract)

2 MLS Printout

A listing is a contractual agreement between theseller and the listing broker and may authorize the

broker to submit information to the Multiple ListingService (MLS). The MLS printout is similar to anadvertisement. Neither the listing agreement nor theprintout is a part of the purchase contract betweenthe buyer and seller. The information in the MLS

printout was probably secured from the seller, thebuilder, or a governmental agency, and could beinaccurate, incomplete or an approximation.Therefore, the buyer should verify any importantinformation contained in the MLS.

3 The Subdivision Disclosure

A Subdivision Disclosure Report (Public Report) is

Report (Public Report)


http://services.azre.gov/publicdatabase/SearchDevelopments.aspx

(ADRE Search Developments)

http://www.azre.gov/PublicInfo/PropertyBuyerChecklist.aspx

(ADRE Property Buyer’s Checklist)

ADRE does not verify the information in the PublicReport. Therefore, the Report could be inaccurate soit should be verified by the buyer.

4 Seller’s Property DisclosureStatement (SPDS)

Most sellers provide a SPDS. This document poses avariety of questions for the seller to answer about the

property and its condition. The real estate broker isnot responsible for verifying the accuracy of the itemson the SPDS; therefore, a buyer should carefullyreview the SPDS and verify those statements ofconcern.

http://bit.ly/2knrN0A (AAR Sample SPDS)



5 Covenants, Conditionsand Restrictions (CC&Rs)

The CC&Rs are recorded against the property and




intended to point out material information about asubdivision. Subdividers (any person who offers forsale or lease six or more lots in a subdivision or whocauses land to be divided into a subdivision) arerequired to give buyers a Public Report. Read the

Public Report before signing any contract topurchase property in a subdivision. Although someof the information may become outdated,subsequent buyers can also benefit from reviewingthe Public Report. Public Reports dating from January1, 1997, are available on the Arizona Department of

Real Estate (ADRE) website.

generally empower a homeowner’s association tocontrol certain aspects of property use within thedevelopment. By purchasing a property in such adevelopment, the buyer agrees to be bound by theCC&Rs. The association, the property owners as a

whole, and individual property owners can enforce thecontract. It is essential that the buyer review and agreeto these restrictions prior to purchasing a property.

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.”

Buyers should consult legal counsel if uncertain of the

application of particular provisions in the CC&Rs.

Advisory

6

In addition to CC&Rs, HOAs may be governed by Articles of Incorporation, Bylaws, Rules andRegulations, and often architectural controlstandards. Read and understand these documents.

Also, be aware that some HOAs impose fees thatmust be paid when the property is sold, so ask if thepurchase of the property will result in any fees.Condominium and planned community HOAs areregulated by Arizona statutes. They are not under the

jurisdiction of the Department of Real Estate (ADRE).

7 HOA Disclosures

If purchasing a resale home in a condominium or


www.alta.org/consumer/questions.cfm

(American Land Title Association)

https://insurance.az.gov/consumers/help-hometitleflood-insurance

(Arizona Department of Insurance)

9 Title Report or Title Commitment

commitment lists documents that are exceptions to

10 Loan Information and Documents

Unless a buyer is paying cash, the buyer must qualify

http://1.usa.gov/1uNYamL (HUD)

https://www.namb.org/links_to_government_resources.php

(National Association of Mortgage Brokers- Consumer Info)

Homeowners Association (HOA)Governing Documents

http://bit.ly/2ebBSLH

(Chapter 16 and 18 of the Arizona Revised Statutes-Title 33)

http://bit.ly/1rCq9kd (ADRE HOA Information)

http://bit.ly/2ebBSLH

http://bit.ly/2e8jdM3

(A.R.S. § 33-1260)

8 Community Facilities District

The Arizona Community Facilities District Act allows

for the formation of a community facilities district(CFD) by a municipality or county for the purpose ofconstructing or acquiring a public infrastructure. It isimportant when purchasing property to determinewhether it falls within the boundaries of a CFD as this

may result in an additional tax burden upon theowner. While the presence of a CFD may be notedon the Residential Seller’s Property DisclosureStatement, prospective buyers can further investigatethe issue by contacting the treasurer’s office or

assessor’s office for the county in which the propertyis located.

https://www.mba.org/who-we-are/consumer-tools

(Mortgage Bankers Association)

11 Home Warranty Policy

A home warranty [policy] is a service contract that


http://1.usa.gov/1Ewofgr (Your Home Loan Toolkit -

Consumer Financial Protection Bureau)

The title report or commitment contains importantinformation and is provided to the buyer by the

title/escrow company or agent. This report or

the title insurance (Schedule B Exceptions). Schedule BExceptions may include encumbrances, easements, andliens against the property, some of which may affect theuse of the property, such as a future addition orswimming pool. Make sure you receive and review all of

the listed documents. Questions about the titlecommitment and Schedule B documents may beanswered by the title or escrow officer, legal counsel, or asurveyor.

typically covers the repair and/or replacement costsof home appliances and major systems such as

heating, cooling, plumbing, and possibly othercomponents of a home that fail due to normal usageand age. Coverage varies depending on the policy. Beaware that pre-existing property conditions are

generally not covered. A home warranty may be partof the sale of the home. If so, buyers should

thoroughly read the home warranty contract tounderstand coverage, limitations, exclusions, andcosts associated with the policy.

planned community, the seller (if fewer than 50 unitsin the community) or the HOA (if there are 50 ormore units) must provide the buyer with a disclosurecontaining a variety of information.

for a loan in order to complete the purchase. A buyershould complete a loan application with a lenderbefore making an offer on a property if at all possibleand, if not, immediately after making an offer. It willbe the buyer’s responsibility to deposit any down

payment and ensure that the buyer’s lender depositsthe remainder of the purchase price into escrow priorto the close of escrow date. Therefore, make sure youget all requested documentation to your lender assoon as possible.

and http://bit.ly/2e8jdM3

http://www.re.state.az.us/HOA/HOA.aspx/

(Homeowners Association Dispute Process)

(A.R.S. § 33-1806)

Nonetheless, the Arizona’s Homeowner'sAssociation Dispute Process is administered by theADRE.

Advisory

12

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 sellermust furnish the buyer with an Affidavit of Disclosure.

14 Professional Inspection Report

The importance of having a property inspected by a


Apache:

http://bit.ly/1FKUhk8

Termites are commonly found in some parts o

http://opm.azda.gov (Office of Pest Management-General Information)

http://opm.azda.gov/ (Obtain a Termite History Report on a Property)

Affidavit of Disclosure

http://bit.ly/1p6CjDO

(AAR Sample Affidavit of Disclosure)

http://www2.epa.gov/lead,

17

Foreign Investment in Real Property Tax Act (FIRPTA)

13 Lead-Based Paint Disclosure Form

If the home was built prior to 1978, the seller must

provide the buyer with a lead-based paint disclosureform. Buyer is further advised to use certifiedcontractors to perform renovation, repair or paintingprojects that disturb lead-based paint in residentialproperties built before 1978 and to follow specific

work practices to prevent lead contamination.

http://1.usa.gov/1uO5wGS (EPA)

http://bit.ly/1rCq9kd (ADRE Lead Based Paint Information)

https://btr.az.gov/laws-standards/standards/home-inspectors

http://www.azashi.com/articles (Additional Information)

15 County Assessors/Tax Records

The county assessor’s records contain a variety of

Cochise:

http://bit.ly/1oUS7ok

Coconino: Gila:

http://1.usa.gov/1n2zoY0 http://bit.ly/Yq3bV9

Graham: Greenlee:

http://1.usa.gov/1oUTsLP http://bit.ly/1md668Y

La Paz: Maricopa:

http://bit.ly/1BuxdWY http://1.usa.gov/1pWx1tF

Mohave: Navajo:

http://bit.ly/Yq6nAj http://bit.ly/1pWxgVA

Pima: Pinal:

http://1.usa.gov/1oUVefT http://1.usa.gov/1rOIQBr

Santa Cruz: Yavapai:

http://bit.ly/1yRYwXl http://bit.ly/1AsANj5

Yuma:

http://bit.ly/1FZ1uir

16 Termites and Other Wood DestroyingInsects and Organisms

www.sb.state.az.us/TermiteInsp.php (What You Should Know

about Wood-Destroying Insect Inspection Reports)

Foreign Investment inReal Property Tax Act (FIRPTA)

http://1.usa.gov/1ldMdnq (I.R.S. FIRPTA Definitions)

www.irs.gov/Individuals/International-Taxpayers/FIRPTA-Withholding

(I.R.S. FIRPTA Information)


http://www.irsvideos.gov/Individual/education/FIRPTA

FIRPTA Video)

(I.R.S.

professional inspector cannot be over-emphasized. Aninspection is a visual physical examination, performedfor a fee, designed to identify material defects in theproperty. The inspector will generally provide the

buyer with a report detailing information about theproperty’s condition. The buyer should carefully reviewthis report with the inspector and ask the inspectorabout any item of concern. Pay attention to the scopeof the inspection and any portions of the propertyexcluded from the inspection.

valuable information, including the assessed valueof the property for tax purposes and some of thephysical aspects of the property, such as thereported square footage. The date builtinformation in the assessor’s records can be eitherthe actual or effective/weighted age if theresidence has been remodeled. All information onthe site should be verified for accuracy.

Arizona. The Office of Pest Management (OPM)regulates pest inspectors and can provide the buyer

with information regarding past termite treatmentson a property.

may impact the purchase of property if the legalowner(s) of the property are foreign persons or non-resident aliens pursuant to FIRPTA. If so, consult atax advisor as mandatory withholding may apply.

(BTR– Home Inspector Standards)

Advisory

Because every buyer and every property is different, the physical property conditions requiring investigation will vary.

https://roc.az.gov/before-hire

COMMON PHYSICAL CONDITIONS IN THE

Section 2

1

(Before You Hire a Contractor – Tips)

2 Square Footage

Square footage on the MLS printout or as listed by the


http://bit.ly/2dhVPdw (A.R.S. 36-1681 Swimming Pool Enclosures)

The seller may have made repairs or added a room to

4 Swimming Pools and Spas

If the property has a pool or a spa, the homeinspector may exclude the pool or spa from thegeneral inspection so an inspection by a pool or spacompany may be necessary.

http://bit.ly/20ZG8tp (AAR)

5

If the home is not connected to a public sewer, it is

http://bit.ly/2plVsZe

(ADEQ – AZ Statewide Inspection Program)

http://az.gov/app/own/home.xhtml

(File a Notice of Transfer Online)

PROPERTY A BUYER SHOULD INVESTIGATE

Repairs, Remodeling andNew Construction

www.greaterphoenixnari.org

of Remodeling Industry – Greater Phoenix Chapter)

(National Association of

http://www.nariofsouthernarizona.memberlodge.com/

(National Association of Remodeling Industry –

Southern Arizona)

https://apps-secure.phoenix.gov/PDD/Search/Permits

(City of Phoenix – Building Permit Records)

https://boa.az.gov/directories/appraiser

(AZFI - Arizona Board of Appraisers Directory)

3 Roof

If the roof is 10 years old or older, a roof inspection by alicensed roofing contractor is highly recommended.

www.azroofing.org

(Arizona Roofing Contractors Association)

https://roc.az.gov/before-hire

(Before You Hire a Contractor – Tips)

Septic and Other On-Site WastewaterTreatment Facilities


The Arizona REALTORS® Residential PurchaseContract provides guidance for the buyer toinvestigate all applicable state, county, and municipalSwimming Pool Barrier regulations and acknowledgereceipt of the Arizona Department of Health Servicesapproved private pool safety notice. The staterequirements contained in the notice may besuperseded by local swimming pool barrier

ordinances that are equal to or more restrictive thanthe state requirements.

the property. The buyer should feel comfortable thatthe work was properly done or have an expert evaluatethe work. Request copies of permits, invoices or otherdocumentation regarding the work performed.

county assessor’s records is often only an estimate andgenerally should not be relied upon for the exactsquare footage in a property. An appraiser or architectcan measure the property’s size to verify the squarefootage. If the square footage is important, you shouldhave it confirmed by one of these experts during theinspection period in a resale transaction and prior toexecuting a contract in a new home transaction.

probably served by an on-site wastewater treatmentfacility (conventional septic or alternative system). Aqualified inspector must inspect any such facilitywithin six months prior to transfer of ownership. For

information on current inspection and transfer ofownership requirements, contact the specific countyenvironmental/health agency where the property islocated or the Arizona Department ofEnvironmental Quality (ADEQ).

Advisory

7

You should investigate the availability and quality ofthe water to the property.

CAGRDs: The Central Arizona Groundwater


http://www.re.state.az.us/PublicInfo/Fissures.aspx

(ADRE – Overview of Arizona Soils)

http://www.azgs.az.gov/hazards_problemsoils.shtml

(Arizona’s Swelling & Shrinking Soils)

concerns about the soil condition or observes

9 Previous Fire/Flood

If it is disclosed there has been a fire or flood on the

Water/Well Issues

http://bit.ly/1rj4DFW

(Wells & Assured/Adequate Water Information)

www.verdevalleywaterusers.org (Verde Valley Water Users Association)

www.cagrd.com

(Central Arizona Ground Water Replenishment District)

8 Soil Problems

The soil in some areas of Arizona has “clay-like”

or http://bit.ly/VAuDO8

Adjudications: Arizona is undertaking several Stream

For information regarding water uses and watershedsaffected by these adjudications, and the forms upon

sale of the property, visit the Department of WaterResources online.

http://bit.ly/1AsX14w

(Department of Water Resources – Adjudications)

Additionally, the Verde Valley Water Users assistsmembers in matters pertaining to the Gila RiverSystem Adjudication.

Other areas are subject to fissure, subsidence and

http://azgs.az.gov/efmaps.shtml (Area Maps)

http://bit.ly/XvZEEO

Subsidence & Earth Fissures)

(Information on Land

www.btr.state.az.us (State Certified Engineers & Firms)

10 Pests

Cockroaches, rattlesnakes, black widow spiders,scorpions, termites and other pests are common inparts of Arizona. Fortunately, most pests can becontrolled with pesticides.

Scorpions: Scorpions, on the other hand, may be

Bed bugs: Infestations are on the rise in Arizona

Roof Rats: Roof Rats have been reported in someareas by Maricopa County Environmental Services.

Termites: Consumer Information available from theOffice of Pest Management (OPM).


6 SewerEven if the listing or SPDS indicates that the

tendencies, sometimes referred to as “expansive soil.”

other soil conditions. Properties built on such soilsmay experience significant movement causing a

major problem.

If it has been disclosed that the property is subjectto any such soil conditions or if the buyer has any

evidence of cracking, the buyer should secure anindependent assessment of the property and itsstructural integrity by a licensed, bonded, and

insured professional engineer.

Replenishment District (CAGRD) functions toreplenish groundwater used by its members,individual subdivisions and service areas of memberwater providers. Homeowners in a CAGRD pay an

annual assessment fee which is collected through thecounty property tax process based on the amount of

groundwater served to member homes.

Bark Beetles: OPM reports the presence of barkbeetles in some forested areas.

Adjudications, which are court proceedings todetermine the extent and priority of water rights inan entire river system.

property, a qualified inspector should be hired toadvise you regarding any possible future problems asa result of the fire or flood damage and/or anysubsequent repairs. For example, if the property wasnot properly cleaned after a flood, mold issues mayresult. Your insurance agent may be able to assist youin obtaining information regarding fire, flood, orother past damage to the property.

difficult to eliminate. If the buyer has any concerns orif the SPDS indicates the seller has seen scorpions orother pests on the property, seek the advice of a pestcontrol company.

and nationally.

http://data.azgs.az.gov/hazard-viewer/

(AZGS – Natural Hazards Viewer)

property is connected to the city sewer, a plumber,home inspector, or other professional should verify

it. Some counties and cities can perform this test aswell.

Advisory

Arizona Department of Real EstatePage 8 of 13 Buyer Advisory (August2017)

Arizona homes. Residents in homes with problem

Drug labs: Residual contamination arising from theillicit manufacture of methamphetamine and otherdrugs carried out in clandestine drug laboratoriespresents a serious risk of harm to human and

environmental health.

http://bit.ly/1HLlWs5 (Information on Scorpions)

http://www.fws.gov/southwest/es/arizona/ (Arizona Ecological Services)

Certain areas in the state may have issues related to

Mold: Mold has always been with us, and it is a rareproperty that does not have some mold. However,over the past few years a certain kind of mold hasbeen identified as a possible contributor to illnesses.

Allergic individuals may experience symptomsrelated to mold.

The Arizona Department of Health Services, Officeof Environmental Health, states:

If the property boundaries are of concern, a survey

http://bit.ly/1PFP9Y2 (Information on Bed Bugs)

http://www2.epa.gov/bedbugs

Them Out)

http://www.maricopa.gov/FAQ.aspx?TID=104 (Maricopa County

http://www.sb.state.az.us/ReTermites.php (Termite Information)

http://www.sb.state.az.us/BarkBeetles.php

Information)

11 Endangered & Threatened Species

http://www.fws.gov/endangered/map/state/AZ.html

(Arizona Endangered Species)

12 Deaths and Felonieson the Properties

Arizona law states that sellers and real estatelicensees have no liability for failure to disclose to abuyer that the property was ever the site of a natural

death, suicide, murder or felony.

This information is often difficult to uncover;

http://bit.ly/2lo53MZ (A.R.S. § 32-2156)

13 Indoor Environmental Concerns

“If you can see mold, or if there is an earthy or mustyodor, you can assume you have a mold problem.”

Radon Gas and Carbon Monoxide: Radon gas andcarbon monoxide poisoning are two of the more

common and potentially serious indoor air quality(IAQ) concerns. Both of these concerns can beaddressed by the home inspector, usually for anadditional fee. For information on radon levels in thestate, visit Arizona Radiation Regulatory Agency

online.

Other: For information on other indoor

http://www.epa.gov/iaq/pubs/index.html (Publications & Resources)

http://1.usa.gov/1it5voK (Indoor Air Quality)

www.epa.gov/mold (EPA)

www.cdc.gov/mold (Mold Information)

http://aardownload.com/2uZmDIc (Drywall Information Center)

www.azrra.gov/radon/index.html (About Radon)

http://www2.epa.gov/asbestos (Asbestos Information)

http://aardownload.com/2vBEvg6

14 Property Boundaries


http://1.usa.gov/1OC9Yji (EPA Formaldehyde Information)

federally listed endangered or threatened speciesthat may affect land uses. Further information maybe obtained on the U.S. Fish and Wildlife website orby contacting the appropriate planning/developmentservice department.

however, the local law enforcement agency may beable to identify incidents related to a propertyaddress.

environmental concerns, the EPA has a host ofresource materials and pamphlets online.

may be warranted. For example, a survey may beadvisable if there is an obvious use of property byothers, i.e., a well-worn path across a property and/orparked cars on the property or fences or structures ofadjacent property owners that appear to be built onthe property. For more information, visit the ArizonaProfessional Land Surveyors online. A search forsurveyors may be found online at the Board of

– Roof Rats)

(Bed Bugs: Get Them Out and Keep

(Bark Beetle

Imported Drywall: There have been reports ofproblematic drywall, produced in China, used in

drywall report health issues such as respiratoryirritation, and other problems such as coppercorrosion and sulfur odors. Visit the ConsumerProduct Safety Commission website for moreinformation.

Technical Registration.www.azpls.org/ (AZ Professional Land Surveyors)

https://btr.az.gov/standards-landing (AZ BTR Land Surveyors)

(Voluntary Guidelines for

Methamphetamine)

Advisory

Every property is unique; therefore, important conditions vary.

CONDITIONS AFFECTING THE AREA SURROUNDING THE

Section 3

15


http://www.fcd.maricopa.gov/3847/Flood-Control-District

(Maricopa County Flood Control District-Services)

Your mortgage lender may require you to purchase

Other Arizona Counties: Consult County Websites.

https://www.fema.gov/national-flood-insurance-program(FEMA)

16

Many factors affect the availability and cost of

http://bit.ly/VDp15E (Home Seller’s Disclosure Report)

https://insurance.az.gov/consumers/help-hometitleflood-insurance

(AZ Department of Insurance)

PROPERTY THE BUYER SHOULD INVESTIGATE

Flood Insurance/Flood Plain Status

https://msc.fema.gov/portal (Flood Map Service Center)

Environmental Concerns

It is often very difficult to identify environmentalhazards. The Arizona Department of EnvironmentalQuality (ADEQ) website contains environmentalinformation regarding the locations of open and

http://legacy.azdeq.gov/environ/waste/solid/plan.html

Waste Facilities)

www.adeq.state.az.us (ADEQ)

Insurance (Claims History)

closed landfills (Solid Waste Facilities), wildfire

http://bit.ly/2egwpza (Elevation Certificates: Who Needs Them and

http://www.azgs.az.gov/hazards_floods.shtml (AZ Flood &

http://pdsd.tucsonaz.gov/pdsd/floodplain-information

(Tucson Flood Information)

17 Other Property Conditions

Plumbing: Check functionality.

Cooling/Heating: Make sure the cooling and heatingsystems are adequate.

Electrical Systems: Check for function and safety.

www.azdeq.gov/function/programs/wildfire.html (Wildfire Information)


flood insurance in connection with your purchase ofthe property. The National Flood Insurance Programprovides for the availability of flood insurance andestablished flood insurance policy premiums based onthe risk of flooding in the area where properties arelocated. Changes to the federal law (The Biggert-Waters Flood Insurance Reform Act of 2012 and theHomeowner Flood Insurance Affordability Act of 2014,in particular) will result in changes to flood insurancepremiums that are likely to be higher, and in thefuture may be substantially higher, than premiumspaid for flood insurance prior to or at the time of saleof the property. As a result, purchasers of propertyshould not rely on the premiums paid for floodinsurance on the property previously as an indicationof the premiums that will apply after completion ofthe purchase. In considering purchase of the propertyyou should consult with one or more carriers of floodinsurance for a better understanding of floodinsurance coverage, current and anticipated futureflood insurance premiums, whether the prior owner’spolicy may be assumed by a subsequent purchase ofthe property, and other matters related to thepurchase of flood insurance for the property.

If community floodplain information is not availablefor a specific property, and in order to obtain floodinsurance, it may be necessary to have an elevationsurvey and obtain an elevation certificate. This is

necessary to determine a property's insurability andpremium rate. You may also wish to contact theFederal Emergency Management Agency (FEMA) for

more information about flood insurance as it relatesto the property.

Why - fact sheet)

Debris)

(ADEQ-Solid

homeowner’s insurance. Property owners mayrequest a five-year claims history from their insurancecompany, an insurance support organization or consumerreporting agency.

information, as well as air and water quality information(and more).

Advisory

Environmentally Sensitive Land


For information on electromagnetic fields, and

Crime statistics, an imperfect measurement at best,

The legislature has mandated the identification of

http://www.scottsdaleaz.gov/codes/eslo

(Environmentally Sensitive Land Ordinance)

2 Electromagnetic Fields

www.niehs.nih.gov/health/topics/agents/emf/

(National Institute of Environmental Health Sciences)

3 Superfund Sites

There are numerous sites in Arizona where the soiland groundwater have been contaminated by

improper disposal of contaminants. Maps may beviewed on ADEQ’s website to see if a property is in anarea designated by the ADEQ as requiring cleanup.

www.epa.gov/superfund/ (EPA) ,

5 Crime Statistics

Since June 1996, Arizona has maintained a registry

Life in a forested area has unique benefits and concerns. Contact county/city fire authority formore information on issues particular to a community.

www.azdps.gov/Services/Sex_Offender/ (Registered Sex Offenders and

http://www.nsopw.gov/en (National Sex Offender Public Site)

http://azsf.az.gov/ or

http://cals.arizona.edu/firewise

(Arizona Fire Wise Communities)

8 Military and Public Airports

http://www.scottsdaleaz.gov/codes/eslo/naos

(Natural Area Open Space)

http://espanol.epa.gov/ (Spanish)

https://www.azdeq.gov/function/programs/gis.html (ADEQ)

4 Freeway Constructionand Traffic Conditions

Although the existence of a freeway near the propertymay provide highly desirable access, sometimes it

contributes to undesirable noise. To search forroadway construction and planning, visit the ArizonaDepartment of Transportation (ADOT) website.

www.azdot.gov (ADOT)

www.azdot.gov/Highways (Statewide Projects)

www.az511.com (Traffic Conditions – Alerts)

http://1.usa.gov/1kSEpHc (Phoenix Crime Statistics)

http://www.tucsonaz.gov/police/statistics (Tucson Crime Stats)

www.leagueaz.org/lgd (Crime Statistics All Arizona Cities)

6 Sex Offenders

Community Notification)

7 Forested Areas

www.firewise.org

(Protecting Your Property from Wildfire)

Vacant land or lots may be for sale within areas of


1

Ordinance: Approximately two-thirds of the Cityof Scottsdale is affected by the EnvironmentallySensitive Land Ordinance (ESLO), which requiressome areas on private property be retained in theirnatural state and designated as National Area OpenSpace (NAOS).

whether they pose a health risk to you or yourfamily, visit the National Institute of EnvironmentalHealth Sciences website.

provide some indication of the level of criminal activityin an area.

and community notification program for convictedsex offenders. Prior to June 1996, registration wasnot required, and only the higher-risk sex offendersare on the website. The presence of a sex offender inthe vicinity of the property is not a fact that the selleror real estate broker is required to disclose.

areas in the immediate vicinity of military and public

airports that are susceptible to a certain level ofnoise from aircraft. The boundaries of these areashave been plotted on maps that are useful indetermining if a property falls within one of these

areas. The maps for military and public airports maybe accessed on the Arizona Department of Real

Estate (ADRE) website. Additionally, the boundariesof military and public airports in Maricopa Countymay be viewed on the county website. These mapsare intended to show the area subject to apreponderance of airport-related noise from a givenairport. Periodic over-flights that may contribute to

noise cannot usually be determined from thesemaps.

high noise or accident potential zones. Because thezoning of these lots may conflict with the buyer’sability to develop the property, the buyer shouldverify whether development is prohibited.

Advisory

OTHER METHODS OF GETTING

Section 4


Zoning regulations for these areas, may be found at

11

Information on demographics, finances and other

http://www.homefair.com/real-estate/city-profile/index.asp

(City Profile Report)

INFORMATION ABOUT A PROPERTY

Talk to the Neighbors

Neighbors can provide a wealth of information.Buyers should always talk to the surroundingresidents about the neighborhood and the history ofthe property the buyer is considering for purchase.

City Profile Report

http://www.re.state.az.us/AirportMaps/MilitaryAirports.aspx

(ADRE - Maps of Military Airports & Boundaries)

www.re.state.az.us/AirportMaps/PublicAirports.aspx

(ADRE - Maps of Pubic Airports & Boundaries)

9 Zoning/Planning/Neighborhood Services

Information may be found on community websites.

http://phoenix.gov/business/zoning (Phoenix)

http://www.tucsonaz.gov/pdsd/planning-zoning (Tucson)

http://www.leagueaz.org/lgd/ (Other Cities and Towns)

10 Schools

Although there is no substitute for an on-site visit tothe school to talk with principals and teachers, thereis a significant amount of information about Arizona’sschools on the Internet. Visit the Arizona Departmentof Education website for more information.

http://www.azed.gov/ (Arizona Department of Education)

ADRE ADVISES:

“Call the school district serving the subdivision to

www.azre.gov/PublicInfo/PropertyBuyerChecklist.aspx (ADRE)

different times of the day and evening, to investigate


Drive around the Neighborhood

Buyers should always drive around theneighborhood, preferably on different days at several

the surrounding area.

Investigate your Surroundings:

Google Earth is an additional method to investigatethe surrounding area:https://www.google.com/earth/

A.R.S.§28-8481.

determine whether nearby schools are accepting new

students. Some school districts, especially in the

northwest part of the greater Phoenix area, have placed

a cap on enrollment. You may find that your children

cannot attend the school nearest you and may even be

transported to another community.”

factors are drawn from an array of sources, such asU.S. Census Bureau, Bureau of Labor, Internal RevenueService, Federal Bureau of Investigation, and theNational Oceanic and Atmospheric Administration andmay be viewed on Homefair’s Website.

Advisory


https://www.nar.realtor/

Fair Housing & Disability Laws

The Fair Housing Act prohibits discrimination in the

http://bit.ly/1sSTprj (AAR - Sample Forms)

http://1.usa.gov/1pbD5iW (US Government – HUD)

http://www.ada.gov/pubs/ada.htm

(Americans with Disabilities Act)

Additional Information

NATIONAL ASSOCIATION OF REALTORS® (NAR)

NAR’S Ten Steps To Homeownershiphttp://bit.ly/YweGug

Home Closing 101www.homeclosing101.org

Information about ArizonaGovernment, State Agencies, City &

Arizona Department of Real EstateConsumer Informationwww.azre.gov/InfoFor/Consumers.aspx

Arizona Association of REALTORS®www.aaronline.com


Section 5

RESOURCES

Market Conditions Advisory

The real estate market is cyclical and real estatevalues go up and down. The financial market alsochanges, affecting the terms on which a lender willagree to loan money on real property. It isimpossible to accurately predict what the realestate or financial market conditions will be at any

The ultimate decision on the price a buyer is willingto pay and the price a seller is willing to accept fora specific property rests solely with the individual

buyer or seller. The parties to a real estatetransaction must decide on what price and termsthey are willing to buy or sell in light of marketconditions, their own financial resources and their

The parties must, upon careful deliberation, decidehow much risk they are willing to assume in atransaction. Any waiver of contingencies, rights or

warranties in the Contract may have adverseconsequences. Buyer and seller acknowledge thatthey understand these risks.

Buyer and Seller assume all responsibility shouldthe return on investment, tax consequences, crediteffects, or financing terms not meet theirexpectations. The parties understand and agreethat the Broker(s) do not provide advice onproperty as an investment. Broker(s) are notqualified to provide financial, legal, or tax adviceregarding a real estate transaction. Therefore,

Broker(s) make no representation regarding theabove items. Buyer and seller are advised to obtainprofessional tax and legal advice regarding the

sale, rental, and financing of dwellings based on race,

color, national origin, religion, sex, familial status(including children under the age of 18 living withpeople securing custody of children under the age of18), and handicap (disability).

Wire Fraud

Beware of wiring instructions sent via email. Cyber

criminals may hack email accounts and send emailswith fake wiring instructions. You shouldindependently confirm wiring instructions in person

or via a telephone call to a trusted and verifiedphone number prior to wiring any money.

given time.

own unique circumstances.

advisability of entering into this transaction.

County Websites

http://bit.ly/2gQNWms (FTC & NAR - Protect your mortgage

closing from scammers

http://bit.ly/2vDDvFk (CFPB- Buying a home? Watch out for mortgage

closing scams

Advisory

^ BUYER SIGNATURE DATE

DATE^ BUYER SIGNATURE


BUYER ACKNOWLEDGMENT

Buyer acknowledges receipt of all 13 pages

of this Advisory.

Buyer further acknowledges that there may be

The information in this Advisory is provided with the


other disclosure issues of concern not listed inthis Advisory. Buyer is responsible for making allnecessary inquiries and consulting theappropriate persons or entities prior to thepurchase of any property.

understanding that it is not intended as legal orother professional services or advice. Thesematerials have been prepared for generalinformational purposes only. The information andlinks contained herein may not be updated or

revised for accuracy. If you have any additionalquestions or need advice, please contact your ownlawyer or other professional representative.

Advisory

AFFIDAVIT OF LEGAL CLASS CORRECTION

If a parcel of property is used as a rental unit and identified by the

Page | 1 of 6 Arizona Association of REALTORS® Lease Owner’s Advisory (March 2016)

OWNER’S RESPONSIBILITIES AND STATUTORY REQUIREMENTS

Residential Rentals are required to comply with the Arizona Residential Landlord/Tenant Act:

http://1.usa.gov/1DcWQKx

county assessor as a class three property pursuant to A.R.S. § 42-

12003, the owner must notify the assessor of the rental use of the

property or be subject to a civil penalty prescribed by A.R.S. § 42-

12052. The lease owner must also register with the assessor in the

NOTIFICATION OF ARIZONA RESIDENTIAL RENTAL

PROPERTY

Pursuant to A.R.S. § 33-1902(B), an out-of-state owner of

residential rental property must designate and record with the

county assessor a statutory agent who lives in this state and who

will accept legal service on behalf of the owner. A person who fails

to comply with any provision of this section shall be assessed a civil

penalty of $1,000, plus an additional $100 for each month after the

date of the original violation until compliance occurs.

TRANSACTION PRIVILEGE TAX

Transaction Privilege Tax (TPT) is charged by some cities on the

owner’s rental income. This TPT, or rental tax, is the responsibility

of the lease owner but may be collected from the tenant with the

rent if permitted by the lease agreement. The tax is filed by the

lease owner or the property management company on either a

mailed to the owner. Failure to pay the applicable sales tax could

on the Transaction Privilege Tax go to:

The Lease Owner’s Advisory is a resourceprovided by the Arizona Association of REALTORS®

county where the property is located in the manner set forth in

A.R.S. § 33-1902(A). http://www.1.usa.gov/1PXAg1R

NOTE: If the owner is required to register the rental property with

the county assessor and fails to do so, the city or town may

impose a civil penalty payable to the city or town in the amount

of $150 per day for each day of violation, and the city or town

may impose enhanced inspections and enforcement measures on

the property. http://1.usa.gov/1ObYULL

BUSINESS LICENSE

Some cities require the owner to have a separate business license

prior to engaging in any type of business activity. It is the owner’s

responsibility to apply for and pay any fees associated with

obtaining this license. If the property is being professionally

managed, the lease owner should discuss this topic with their

property manager. www.azdor.gov/Business/LicensingGuide.aspx

FOREIGN LEASE OWNERS RESIDING OUTSIDE OF THE

UNITED STATES

Foreign lease owners must secure an Individual Taxpayer

Identification Number (ITIN). Unless the foreign lease owner files a

Form W-8ECI with their property management company, the

property manager must withhold 30% of the gross rental proceeds

for the property owned by the foreign lease owner. It is strongly

recommended that foreign lease owners retain the services of a

CPA and/or IRS Certified Acceptance Agent to ensure compliance

with applicable IRS rules and regulations. http://1.usa.gov/1O7u6NL

monthly or quarterly basis. The filing period is determined by the

applicable city and the tax rate is anywhere from 1.5% - 3% of the

monthly rent. In addition, some cities collect their own privilege

taxes; others choose the Arizona Department of Revenue to collect

the taxes for them. In some cases, it is the owner’s responsibility to

apply for this license if the property management company does

not have a master license for that city. After the city or state

receives the owner’s application, a license will be issued and

result in a penalty or fine by the city or town. For more information

www.azdor.gov/Business/TransactionPrivilegeTax.aspx

.

Phone: Fax:


1.

2.

3.

4.

5.

Advisory Garden Brook Realty, 520 W Sheldon Street Suite 2A Prescott, AZ 86301

928-710-0020 Diann Dede Erceg928-227-2654

RESIDENTIAL LEASE AGREEMENT

Owners should protect themselves by taking the time to read the


COMMON DOCUMENTS AND DISCLOSURES

residential lease agreement and understand their legal rights and

obligations before they enter into a lease agreement. A sample

Arizona Association of REALTORS® (AAR) lease agreement can be

found at:

MOVE-IN/MOVE-OUT INSPECTION

Upon move in, a lease owner must furnish the tenant with a move-

in form upon which the tenant can specify any existing damage to

the property, along with a written notification to the tenant that

the tenant may be present at the move-out inspection. Upon

request by the tenant, the lease owner shall notify the tenant

http://bit.ly/1GcMWZq

DISCLOSURES

The owner must disclose in writing all material (important) facts

regarding the property, including all physical, environmental, and

other conditions that affect the property and any violations of

applicable building, zoning, fire, health, and safety codes. Failure to

make legally required disclosures may result in civil liability.

sample RLOPDS can be found at:

The Arizona Department of Real Estate (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.”

when the move-out inspection will occur. A.R.S. §33-1321(C). Lease

owners should keep a copy of the completed move-in form for

their records and may also want to take photographs of the

property at the time of move-in to document its condition. A

sample of AAR’s Move-in/Move-out Condition Checklist can be

viewed at:

LEAD-BASED PAINT DISCLOSURE FORM

If the home was built prior to 1978, the lease owner must provide

the tenant with a lead-based paint disclosure form. Information

about lead-based paint may be obtained at: http://bit.ly/1lewSUe

or www.epa.gov/lead/

PROPERTY MANAGEMENT AGREEMENT

Lease owners electing to retain the services of a property manager

should secure the retention by way of a written property

management agreement that complies with the requirements set

forth in A.R.S. §32-2173. A sample copy of AAR’s Property

Management Agreement can found at: http://bit.ly/1P40fWB

Changes in any disclosures previously made must be promptly

conveyed. Although no specific form is required, the Residential

Lease Owner’s Property Disclosure Statement (RLOPDS) can assist a

lease owner in complying with their disclosure obligations. By way

of this form, the lease owner answers a variety of questions about

the property and its condition. Once completed, a copy of the

disclosure form is given to prospective tenants. The property

manager/broker is not responsible for verifying the accuracy of the

items on the RLOPDS so it is important for the lease owner to

accurately complete this form to the best of their knowledge. A

http://bit.ly/1Sg09c6

.

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 may impose fees and

require the lease owner to register the tenant. If a lease owner has

questions about their rights and remedies regarding homeowners

associations or community associations, additional information can

be found at: http://bit.ly/1rCq9kd

Chapters 16 and 18 of the Arizona Revised Statutes - Title 33

www.azleg.state.az.us/ArizonaRevisedStatutes.asp?Title=33

.

http://bit.ly/1P41VPQ

SWIMMING POOLS & SPAS

Each city and county has its own swimming pool barrier ordinance

and a lease owner should investigate and comply with all

applicable state, county and municipal pool regulations. Pool

barrier contact information for Arizona cities and counties may be

found at:

Upon move in, a lease owner must furnish the tenant with a signed

copy of the lease. A.R.S. §33-1321(C).

1.

2.

3.

4.

HOMEOWNERS ASSOCIATION (HOA) GOVERNING

DOCUMENTS

If CC&Rs are recorded against the property, it is essential that the

owner review and agree to any restrictions prior to leasing a

property.

5.

or

6.

7.

www.aaronline.com/documents/pool_contacts.aspx .

The Arizona Department of Health Services Private Pool Safety

notice may be found at: http://azdhs.gov/phs/oeh/pool_rules.htm

The state law on swimming pools is located at:

www.azleg.state.az.us/ars/36/01681.htm


Advisory

NOTICE

Unless otherwise agreed, all notices shall be sent registered or


LEASE OWNER’S RIGHTS AND OBLIGATIONS

certified mail, or personally delivered. A.R.S. §33-1313.

TERMINATION OF THE LEASE Unless the parties desire for the lease agreement to continue,

written notice of intent not to renew the lease agreement shall be

issued pursuant to the terms of the lease. If the lease continues on

a month-to-month basis, absent prior written agreement, either

the lease owner or the tenant may terminate by providing 30-days

QUALIFYING THE TENANT

The lease owner is encouraged to screen prospective tenants in a

variety of different ways, including credit, criminal history,

employment and rental history. A sample of AAR’s Application for

Occupancy can be found at:

pursuant to A.R.S §33-1321(G). The lease owner can subtract

written notice prior to the periodic rental date (i.e. the date on

which rent is due) per A.R.S. §33-1375(B).

A holdover tenant is someone who stays in the leased property

FAIR HOUSING & DISABILITY LAWS

The Fair Housing Act prohibits discrimination in the sale, rental,

people securing custody of children under the age of 18), and

http://www.1.usa.gov/1pbD5iW

one and one-half month’s rent. However, a tenant is not

prohibited from voluntarily paying more than one and one-half

During the term of the lease the lease owner or lease owner’s

agent should hold the security deposit for the tenant. At the end of

the lease all refundable deposits shall be refunded to the tenant

unpaid rent or repair costs from the security deposit. Within 14

receive an itemized list of any/all security deposit deductions

§33-1321(D).

repairs are made to keep the property in a fit and livable condition.

Following notice, the lease owner has five days to make any repairs

days to make any other requested repairs.

FORECLOSURE

The lease owner shall not allow the property to become the

subject of a trustee's sale and doing so may place the lease owner

in breach of the lease agreement and subject them to civil liability.

Within five (5) business days after receipt of a notice of trustee’s

sale, the lease owner shall provide the tenant with written notice.

and financing of dwellings based on race, color, national origin,

religion, sex, familial status (including children under the age of 18

living with parents or legal custodians, pregnant women, and

handicap (disability). Visit HUD’s Fair Housing/Equal Opportunity

website at:

DEPOSITS & FEES

The lease agreement should specify which deposits/fees are

refundable and which are not. A lease owner is not permitted to

demand security, including prepaid rent, in an amount in excess of

month’s rent in advance.

business days after termination of the tenancy, delivery of

possession and demand by the tenant, the tenant is entitled to

together with the amount due and payable to the tenant. A.R.S

REPAIRS & PROPERTY CONDITION

Pursuant to Arizona law, the lease owner is generally

responsible for ensuring that all “electrical, plumbing,

sanitary, heating, ventilating, air-conditioning and other

good and safe working order and condition. A.R.S. §33-1324. It is

the lease owner’s responsibility to make sure that necessary

that materially affect the health and safety of the tenant(s) and 10

ACCESS TO THE PROPERTY BY LEASE OWNER OR LEASE

OWNER’S REPRESENTATIVE

Unless the tenant requests repairs in writing, the lease owner must

give the tenant at least two days’ notice to enter the property

during reasonable hours to make repairs, conduct inspections,

have services completed or exhibit the property to prospective

purchasers and tenants. The lease owner has the right to

immediately enter the property in the event of an emergency or by

court order. A.R.S. §33-1343.

after the express term of the lease has expired. The lease owner

can choose to evict a holdover tenant or allow the tenant to

continue living in the property on a month-to-month basis under

the terms and conditions of the lease agreement.

A.R.S. 33-1331(B). A failure by the lease owner to pay the mortgage

does not eliminate the tenant’s obligation to pay rent.

1.

2.

or

http://bit.ly/21eHzag

For information on the Americans with Disabilities Act, or to file a

complaint, visit http://www.ada.gov/ada_intro.htm and

http://bit.ly/1lFBvaD

3.

4.

5.

NOTE: Pursuant to A.R.S. §33-1324(C), the lease owner and tenant

may agree in writing, supported by adequate consideration, that

the tenant will perform the lease owner’s duties to maintain a fit

premises and perform specified repairs.

6.

7.

8.


Advisory


ADDITIONAL RESOURCES

LEASE OWNER’S RIGHTS AND OBLIGATIONS

(CONTINUED)

9. INSURANCE

Lease owners are encouraged to contact their property insurance

carrier prior to leasing to discuss appropriate coverage.

http://1.usa.gov/1it7SrE

INFORMATION ABOUT ARIZONA GOVERNMENT

Links to state agencies: www.az.gov

ARIZONA DEPARTMENT OF REAL ESTATE

Consumer Information: www.azre.gov/InfoFor/Consumers.aspx

ARIZONA ASSOCIATION OF REALTORS®

Find a REALTOR®: www.aaronline.com/

ENVIRONMENTAL CONCERNS

For information on indoor environmental concerns, the EPA

has a host of resource materials and pamphlets available at

www.epa.gov/iaq/pubs/index.html .

SECTION 8 HOUSING

Information regarding Section 8 programs available through

the Arizona Public Housing Authority can be found at:

http://1.usa.gov/1IbQTAh or http://findsection8housing.org/

DRUG LABS

Until remediation has been completed in the manner set

forth in A.R.S.§ 12-1000(E), meth labs and other dangerous

drug labs are prohibited from being rented or leased. A list

of unremediated properties can be found at:

https://btr.az.gov/drug-lab-site-clean


Advisory


TOP 10 QUESTIONS YOU SHOULD ASK WHEN CONSIDERING HAVING YOUR

in a variety of different ways. You will therefore want to ensure

Does the property manager possess an Arizona real

Generally speaking, individuals acting as residential leasing agents

consent.

1.

.

PROPERTY PROFESSIONALLY MANAGED

estate license as required by Arizona law?

http://services.azre.gov/publicdatabase/

or on-site managers of residential rental property, who are

performing residential leasing activities on residential income

property at more than one location during the period of the

agents' or on-site managers' regular workday, are required to

maintain an Arizona real estate license. A.R.S. § 32-2121.

2. Does the brokerage with whom the property manager is

affiliated permit its agents to engage in property

management services?

Not all brokerages permit agents to engage in property

management services and an agent should not perform property

management activity without their broker's knowledge and


affiliated maintain a property management trust account,

and if so, is the account held with an FDIC insured

institution?

Arizona statute requires that all property management accounts be

designated as trust accounts and that a broker's trust account is

required for all of the owner's monies, except if the owner directs

the broker to deposit the monies into the owner's account. A.R.S.

§ 32-2174.


affiliated utilize a written property management agreement

that complies with the requirements set forth in A.R.S. §

32-2173?

Arizona statute mandates the material terms and conditions that

http://bit.ly/21cUGJ6

are to be set forth in all property management agreements. A.R.S.

§ 32-2173.

5. Does the property manager maintain written tenant

screening criteria that meet with your approval?

http://bit.ly/1lFBvaD

Property managers screen prospective tenants in a variety of

different ways, including credit, criminal history, employment and

rental history. You will want to ensure that your property manager

screens applicants in a manner you deem sufficient.

6. How often and by what method does the property

manager pay you and what account reconciliation methods

are utilized by the property manager?

Terms of this nature should be set forth in detail in your written

property management agreement and should meet with your

approval.

7. Does the property manager maintain a written plan to

market the property to potential tenants, and if so, does

that plan meet with your approval?

Property managers market rental properties to prospective tenants

that your property manager has a plan in place to secure tenants

and that the plan meets with your approval.

8. Does the property manager maintain a written plan for

addressing repairs and what level of approval/supervision,

if any, do you maintain over the manner in which repairs

are made?

You and the property manager should agree in writing to what

degree the property manager will assist you in the employment

and supervision of contractors. The parties should further agree in

writing whether you have the right to pre-approve expenditures in

excess of an agreed upon sum of money.

9. How does the property manager handle repairs in excess

of $1,000, and if the property manager hires contractors to

address those repairs, are the contractors licensed by the

Arizona Registrar of Contractors?

Generally speaking, Arizona statute requires that any person

engaging in any work or operation on one undertaking or project

by one or more contracts, for which the aggregate contract price,

including labor, materials and all other items (but excluding any

electrical fixture or appliance that was designed by the

manufacturer, that is unaltered) is $1,000 or more, hold an Arizona

contractor's license. A.R.S. § 32-1121.

10. Under what circumstances are you permitted to

terminate the property management agreement?

Property management agreements must specify a beginning and

ending date and contain cancellation provisions that are agreeable

to both parties. If the property management agreement contains

an automatic renewal provision, the property management firm

must send the lease owner a reminder notice at least 30-days

before the renewal date. A.R.S. § 32-2173.


Advisory


Lease owner acknowledges receipt of all six pages of Lease Owner's Advisory

A Resource forReal Estate Consumers

Provided by the

this advisory. Lease owner further acknowledges that

there may be other disclosure issues of concern not

listed in this advisory. Lease owner is responsible for

making all necessary inquiries and consulting the

appropriate persons or entities prior to the leasing of

any property.

The information in this advisory is provided with the

understanding that it is not intended as legal or other

professional services or advice. These materials have

been prepared for general informational purposes

only. The information and links contained herein may

not be updated or revised for accuracy. If you have

any additional questions or need advice, please

contact your own lawyer or other professional

representative.

LEASE OWNER SIGNATURE DATE

LEASE OWNER SIGNATURE DATE


SAMPLE

SAMPLE

Advisory

Document updated:

August 2009

The pre-printed portion of this form has been drafted by the Arizona Association of REALTORS®.

Any change in the pre-printed language of this form must be made in a prominent manner.

No representations are made as to the legal validity, adequacy and/or effects of any provision,

including tax consequences thereof. If you desire legal, tax or other professional advice, please

consult your attorney, tax advisor or professional consultant.

Market Conditions Advisory • Updated: August 2009

MARKET CONDITIONS ADVISORY

The real estate market is cyclical

The financial market also changes, affecting the terms on which a lenderwill agree to loan money on real property. It is impossible to accuratelypredict what the real estate or financial market conditions will be at anygiven time.

REAL SOLUTIONS. REALTOR® SUCCESS

and real estate values go up and down.

The ultimate decision on the price a Buyer is willing to pay and the price a Seller is willing toaccept for a specific property rests solely with the individual Buyer and Seller. The parties to

The parties must, upon careful deliberation, decide how much risk they are willing to assume ina transaction. Any waiver of contingencies, rights or warranties in the Contract may haveadverse consequences. Buyer and Seller acknowledge that they understand these risks.

Buyer and Seller assume all responsibility should the return on investment, tax consequences,credit effects, or financing terms not meet their expectations. The parties understand andagree that the Broker(s) do not provide advice on property as an investment. Broker(s) are notqualified to provide financial, legal, or tax advice regarding a real estate transaction. Therefore,

Broker(s) make no representation regarding the above items. Buyer and Seller are advised toobtain professional tax and legal advice regarding the advisability of entering into thistransaction.

THE UNDERSIGNED ACCEPT AND UNDERSTAND THE FOREGOING AND ACKNOWLEDGE

RECEIPT OF A COPY OF THIS ADVISORY.

^ BUYER'S SIGNATURE MO/DA/YR ^ BUYER'S SIGNATURE MO/DA/YR

^ SELLER'S SIGNATURE MO/DA/YR ^ SELLER'S SIGNATURE MO/DA/YR

Copyright © 2009 Arizona Association of REALTORS®. All rights reserved.

Phone: Fax:


a real estate transaction must decide on what price and terms they are willing to buy or sell in

light of market conditions, their own financial resources and their own unique circumstances.

Garden Brook Realty

SAMPLE SAMPLE

Garden Brook Realty, 520 W Sheldon Street Suite 2A Prescott, AZ 86301928-710-0020 928-227-2654 Diann Dede Erceg

Advisory

PdfConvertShort Sale Seller Advisory - 03/2016

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