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Real Estate Pre-License Level 14, Chapter 1 Flashcards Who is responsible for completing a Seller's Property Disclosure Statement?the seller Arizona Disclosure FormsWhile the disclosure of a property's condition is required, a specific disclosure form is not.Listing agents who are Realtors will likely provide their sellers with a blank copy of the Arizona Association of Realtors' Seller's Property Disclosure Statement.If the seller fails to provide an honest disclosure of material facts, whether by omitting or concealing defects, legal
consequences can include the following:
- The buyer may cancel the purchase agreement prior to
closing.- If the sale has closed, the buyer may pursue legal action on the basis of fraud or misrepresentation.- The buyer may also sue the seller in civil court for damages.Innocent Misrepresentation LiabilityIt's not likely that a licensee will be found liable for innocent misrepresentation. That's because the seller and licensee are only responsible for disclosing material facts known to them.The seller and the listing agent have a duty to disclose latent defectsAnd if you represent buyer clients, it's
important that you:
- Keep a sharp eye out for signs of latent defects- Ask
questions on their behalf in an attempt to discover any latent defects that are not readily visible Contractor Licensing ProcessEvery contractor who does remodeling or construction for a commercial or residential client is required to be licensed and bonded. A bonded contractor is one that has paid a premium to a surety company that will help out the consumer if the contractor leaves them with damaged property or shoddy or incomplete work. Think of it kind of like insurance.The state agency that licenses and regulates the activities of contractors is called the Arizona Registrar of Contractors.For which of the following would a seller be found liable?failure to disclose a defect in the condition of the property that is known to them Seller Completes the FormNote that the seller is responsible for filling out the property disclosure statement, NOT the seller's agent. You can only help by answering any questions they may have.A buyer is entitled to seek recourse only if the seller:fails to provide the applicable disclosures OR misrepresents information requiring disclosure Buyer's Agent Responsibilities- Assure that the completed Seller's Property Disclosure Statement is delivered to the buyer.- Direct the buyer to sign the form to acknowledge receiving it.The "handyman exemption" applies to jobs that cost less
than:
$1,000
Land and Soil ConditionsAre licensees expected to ask about land and soil conditions? That will depend on the type of transaction and
the licensee's area of practice.For example, if the licensee is an expert in agricultural land sales, then they should reasonably be expected to know if the property is in an area in which the water table is too deep for reliable water supply in a dry season. Most licensees, however, won't need to know these facts on the sale of a suburban home in a subdivision.For most residential sales transactions, licensees should be able to identify if there are signs of flooding on a property. Is there noticeable erosion on the land? Are there signs of water pooling in the yard?Depending on the circumstances, that could potentially alert you to some sort of problem - at which point, you should ask the seller about it.
All of the following would be considered material facts
related to property condition EXCEPT:
a broken microwave that is not a built-in Listing Agent Responsibilities- Advise sellers of their duty to disclose any known material defects by completing a Seller's Property Disclosure Statement.- Give the seller the disclosure form to fill out at the initial listing appointment. It's an ideal time for the agent to learn more about the property and for the seller to ask questions about what must be disclosed. The form must be signed by the seller to certify that the info is complete and correct.- Deliver the statement to the prospective buyer(s) by the date specified in the purchase contract. The Arizona Association of Realtors' purchase contract says the SPDS is due within three days of contract acceptance. If you don't deliver the form by the deadline, the seller will be in breach of contract and the buyer will be able to cancel it.Which of the following is the BEST definition of a material fact?a fact that could possibly persuade a buyer or seller to change their decision about a property if they knew about it Licensed Contractors in ArizonaAs a real estate licensee in Arizona, you will be expected to know the basic licensing requirements of contractors in this state and the importance of using their services.Limitations of the StatementDid you notice that the statement is a disclosure of facts known by the seller? A seller cannot be expected to disclose conditions of which they are unaware.Also, the buyer should know that the seller's disclosure statement is not a warranty of any kind, and is not a substitute for any inspections.Negligent misrepresentation occurs when the licensee:either knows or should have known that a material fact is not accurate, that certain information should be In general, licensees are liable:if they knowingly misrepresent material facts pertinent to the transaction Arizona Affidavit of DisclosureYou should know that even an empty lot could require property condition disclosures. If up to five parcels of land in an unincorporated area will be conveyed, the seller has to give the buyer an affidavit of disclosure. This document gets recorded at least seven days prior to closing, just like the deed of transfer.Licensee Liability: MisrepresentationMisrepresentation is a statement, written or spoken, that is
false or misleading. There are different types:- Innocent
misrepresentation- Negligent misrepresentation- Fraudulent misrepresentation (including "silent fraud") Licensees will also be expected to conduct visual
inspections of structural components such as:
- Roofs- Gutters- Downspouts- Doors- Windows-
FoundationsYou won't be expected to climb a ladder and get up on a roof, but definitely take a look from the ground, and be sure to ask the seller about any known issues related to these structural components.
Fraudulent misrepresentation occurs when the licensee:intentionally attempts to prevent a buyer from finding out about a material fact Liability of the AgentThe seller's agent will not be liable for any violation of the law by the seller unless the agent knowingly acts with or otherwise aids the seller in committing the violation. This type of deception can result in thousands of dollars in fines for the wrong-doing agent.Licensees and sellers alike are responsible for disclosing all known material facts in a real estate transaction. This includes defects that are not specifically outlined in the Seller's Property Disclosure Statement.Ensuring proper completion of the SPDS form is no small task. As a licensee, you should educate your sellers on their legal obligations to make honest and complete disclosures.Negligent Misrepresentation LiabilityDepending on the circumstances, a licensee could potentially be found liable for acting negligently with regard to property condition disclosures. In the example given, it would be reasonable to expect a licensee to ensure that the seller is engaging in truthful disclosure.Latent Defectsany structural defects that cannot be detected by ordinary inspection Alterations or AdditionsAre there any known alterations or additions on the property? Be sure to ask the seller! Some examples include a garage that was altered into a guest house or a second-story addition built on a one-story home. This is especially important if the alterations or additions were constructed without the appropriate permits. The buyer could end up inheriting a problem with the local zoning authorities.Seller Mike lives in a different state, but wants to sell his property. He hires listing agent Linda and asks that she do a walkthrough of the property and fill out the property disclosure statement based on what she sees. Should Linda comply with Mike's request?No. The seller is required to complete the form, not the agent.As the seller's agent, what should you do when a seller wishes to list the property in "as is" condition?inquire about known issues Accuracy of representation of lot or improvement sizeThe seller makes certain representations about the size of the lot or improvements on the lot (any non-natural structure built on or affixed to land), encroachments, or easements affecting its use. These are all material facts and the seller is responsible for accurately representing those facts to potential buyers and agents.If the seller indicates the size of their lot, you can easily verify that information by checking a survey (if one is available) or tax
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