What To Disclose When Selling A Home

Question: We own a home on the side of Camelback Mountain in Paradise Valley. If there are heavy rains, there will occasionally be minor rockslides into our swimming pool in the backyard. We are now selling our home. Do we have to disclose these occasional minor rock slides?

Answer: Probably. In determining what a seller should disclose to a buyer, two rules should be followed: 1. If it is material it must be disclosed; if it is not material, why not disclose it? 2. If you were the buyer, would you want to know?

If these two rules are followed, there should never be any disputes after close of escrow between a seller and a buyer about what the seller should have disclosed to a buyer. The Arizona judicial system, however, is kept busy by sellers and buyers litigating disclosure issues. For example, a January 2021 Arizona Court of Appeals decision involved the failure of the seller to disclose bathroom odors due to deteriorated sewer drainage pipes. The testimony of the housekeeper was that the seller had instructed her not to flush the toilet, that there were handmade signs in the bathroom not to use the toilet, and that there were air freshener packets and candles in the bathroom. A plumbing expert, however, testified that, even though there may have been bathroom odors, the only way to know that the deteriorating sewer pipes were the cause of the bathroom odors was to unearth the sewer pipes, or to inspect the sewer pipes with a camera. The trial judge ruled that the seller did not have to disclose the bathroom odors because even a plumbing expert could not determine the cause of the bathroom odors. The Court of Appeals unanimously reversed, and said that the seller had to pay for the cost to repair the deteriorating sewer pipes because the seller should have disclosed the bathroom odors, even if the seller did not know the specific cause of the bathroom odors.

Note: If there was disclosure of the bathroom odors, the buyer would have had the right either to cancel the purchase contract, or to spend the money to have a plumbing inspection to determine the cause of the bathroom odors and the cost to remedy the bathroom odors.