Disclosure Affidavit is Required by Law

  Question: After a bank foreclosed on a 5-acre parcel of vacant land in northwest Maricopa County, we purchased this land from the bank.  In the purchase contract the sale by the bank to us was “as is,” and the bank was not required to furnish us with the standard Seller’s Property Disclosure Statement (SPDS).  Our plan was to build a home on this 5-acre parcel when both of us retired.  Although we didn’t realize it at the time, we should have had a real-estate broker or attorney assist us.  In any event, we received a letter from a neighboring property owner asking us if we wanted to participate in “bringing sewer” to the area.  We are not sure how many property owners would participate, but the total cost for each property would be more than $20,000.  Even though this sale by the bank of the 5-acre parcel was “as is,” did the bank have some obligation to disclose an important fact such as no sewer connection?

  Answer:  Yes.  Even though the information you were given was correct in that a standard SPDS form was not required in the sale of vacant land, the bank was required to disclose whether or not the property had a sewer connection through an affidavit of disclosure. The seller of any single real property in a county, other than subdivided land, has the obligation to furnish an affidavit of disclosure to the buyer (Arizona Revised Statutes, Section 33-422). A seller is required to furnish an affidavit of disclosure regardless of whether the property is being sold “as is.” This affidavit of disclosure cannot be waived by the buyer and requires a seller to affirmatively disclose important facts such as sewer connection and ingress and egress to the real property. The form affidavit of disclosure within the statute states in question 8, “[t]he following services are currently provided to the property: water, sewer, electric, natural gas, single party telephone, cable television services.” If the box next to “sewer” is checked, then the bank has stated that sewer was serving the 5-acres, and you would have a claim of fraud, misrepresentation or negligent misrepresentation against the bank depending on the bank’s knowledge of the lack of sewer connection.

     You should have received an affidavit of disclosure from the seller at least seven days before closing. If you cannot find the affidavit of disclosure in your purchase paperwork, you should contact the title company to deliver it to you.

    You cannot be required to waive in advance the right to an affidavit of disclosure furnished by the seller seven days before closing. The problem is that, if for some reason there was never an affidavit of disclosure furnished to you or furnished to you via the title company, you probably no longer have any claim against the seller.  If you did not receive an affidavit of disclosure before closing, and you never inquired about an affidavit of disclosure missing at that time, then you may have waived any claim against the seller for failure to furnish it to you.  The remedy for not receiving an affidavit of disclosure is that it enables the buyer to cancel the transaction and receive the earnest money deposit in full. Since the time for that remedy has passed and you already purchased the parcel without the affidavit of disclosure, you probably no longer have any claim available to you.

    Excepting for subdivisions or the sale of five lots or more, every buyer of real property in Arizona must be given an affidavit of disclosure. If you were told by an agent or broker that an affidavit of disclosure was not necessary because the property was listed “as is”, then you may have a claim against that agent or broker.