The Sellers Property Disclosures Statement is commonly known in the Real Estate world as the SPDS (or Spuds, but never spell it that way!).
In the state of Arizona, we are what you would refer to as a Disclosure State. That means that the seller of a property is responsible for disclosing ANY material fact about the property to the potential buyer, so that they can make an educated decision about buying a home.
Here’s what you need to know about the SPDS.
For a Seller, this Disclosure Notice is how you avoid a law suit. If a buyer is left to discover your mistakes later, they have the right to sue for damages. They will have to prove that you intentionally neglected to disclose, so the more you do, the harder it is to prove neglect. Right?
For a Buyer, the disclosure should be read carefully, but thought of simply as a starting off point. While the state association has continuously worked to ensure that all material facts are noted on this form… it is only but one single form… you cannot put all of your trust in one form. If there is something that is important… ASK. If you don’t ask, it makes it much harder to claim they left something out later on.
The SPDS is simply a tool, written into the contract to be included in the sale. You cannot WAIVE the SPDS. You can exclude it from the contract, but the legal responsibility to disclose remains.
Agents: If a buyer is not to receive one, the seller should be advised that they will still need to disclose any information that the buyer requests, as that is their legal responsibility.
If the buyer does not receive disclosures from the seller, the buyer should receive a copy of a blank SPDS, to review and use to ask questions of the seller. Not everything on the SPDS will be a material fact to every buyer, but if they see something that is, they should ask the agent to collect more information from the seller.
Investors should NEVER exclude SPDS. In fact, having more knowledge of the property than most people, these disclosures should be detailed and much longer than those of a traditional sale.
Also, important to note…. According to statute ARS 32-1186 A6, in the event that a seller has had work completed on the property, and the work was done in accordance to state statute, using a licensed contractor, the seller should also be providing the name and license number of the contractors who worked on the home. The additional comments section of this document is a great place to put those license numbers.
If you are intending to sell the property, be advised that you are obligated to hire licensed contractors, in accordance to ARS 32-1121 Sec 5.
There is a handyman exclusion in ARS 32-1121 sec 14 b, which states that a homeowner may choose to perform work on the home, if the work is less than $1,000 for the whole project, and is minor and casual in nature.
Agents: Remember to hold on to your files, and advise those buyers to review them again when the time to sell comes around. Once you know something…. you can’t claim ignorance, so a quick review of past SPDS and Inspection reports is a great way to help your new sellers complete their SPDS properly when they come back to you to sell their home down the line.