A real estate agent is vital to the home buying process and can provide a variety of services in locating a property, negotiating the sale, and advising the buyer. A real estate agent is generally not qualified to 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 home.
This advisory is designed to make a buyer’s home purchase as smooth as possible. Some of the more common issues that a buyer may decide to investigate or verify concerning a home purchase are summarized in this Advisory. Included in this Advisory are: (1) common documents a buyer should review; (2) physical conditions in the property the buyer should investigate; and (3) conditions affecting the surrounding area that the buyer should investigate. In addition, a buyer must communicate to the 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.
REMEMBER: This Advisory is supplemental to obtaining professional home inspections. Professional home 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 home.
Common documents a buyer should review
The documents listed below may not be relevant in every transaction, nor is the list exhaustive. Unless otherwise stated, the information contained in these documents has not been independently verified by the real estate agent. Purchase Contract Buyers should protect themselves by taking the time to read the real estate purchase contract and understand their legal rights and obligations before they submit an offer to buy a home. For a discussion of resale contracts, see www.aaronline.com/documents/hb_cont.aspx; for a discussion of new home contracts, see www.aaronline.com/documents/BuyNewHome.aspx.
A listing is an agreement between the seller and the listing agent and may authorize the listing agent to submit information to the Multiple Listing Service (“MLS”). The MLS printout is similar to an advertisement and contains various abbreviations and symbols. Neither the listing agreement nor the printout is a part of the purchase contract between the buyer and seller. The printout contains a limited description of a property, such as its size, encumbrances, utilities, amenities, etc. The information was probably secured from the seller, the builder, or a governmental agency, and could be inaccurate, incomplete or an approximation. Therefore, the buyer should verify any important information contained in the MLS.
The Subdivision Public Report
This report is required to be given to buyers by the subdivider of a new home subdivision and should be read before signing any contract to purchase a new home. The purpose of this document is to point out material information about the development that a buyer might want to know when making a decision to purchase. For example, the section of the Public Report entitled “Adjacent Lands and Vicinity” will disclose adjacent land uses that may be of concern. The Public Report is prepared by the subdivider, could be inaccurate, and should be verified. Additional information about the Public Report may be found on the Arizona Department of Real Estate (“ADRE”) web site at www.re.state.az.us/checklist.html.
Seller’s Property Disclosure Statement (“SPDS”) Most sellers provide a SPDS. This document poses a variety of questions for the seller to answer about the property and its condition. A buyer should carefully review the SPDS and verify those statements of concern. The ADRE advises: “Read the seller’s property disclosure report, and check every item on it. Ask to see receipts for repairs to the home. Look behind large pictures on the wall and behind anything on the floor that conceals large areas of the wall. Look for stains on the ceilings or carpets that might indicate water damage. Read the purchase contract carefully to determine if there are any deadlines for challenging the seller’s disclosure report or for having your own inspections conducted.” www.re.state.az.us/checklist.html. Remember, your review of the SPDS is not a substitute for professional inspections.
Covenants, Conditions and Restrictions (“CC&Rs”) The CC&Rs are recorded against the property and generally empower a homeowner’s association to control certain aspects of property use within the development. By purchasing a home in such a development, the buyer agrees to be bound by the CC&Rs. Thus, the CC&Rs form an enforceable contract. The association, the homeowners as a whole, and individual homeowners can enforce the contract. It is essential that the buyer review and agree to these restrictions prior to purchasing a home. The 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, especially those addressing landscaping, RV parking, play equipment, satellite antennas, and other common amenities — particularly if the subdivision is governed by a homeowner’s association.” www.re.state.az.us/checklist.html. A short but informative document on the purpose and effect of CC&Rs may be read at www.realtor.com/BASICS/condos/ccr.asp. Buyers should consult legal counsel if uncertain of the application of particular provisions in the CC&Rs.
Homeowner’s Association (“HOA”) Governing Documents In addition to CC&Rs, HOAs may be governed by Articles of Incorporation, Bylaws, Rules and Regulations, and often architectural control standards. The HOA is in place to enforce these rules and to preserve the value of homes in the condominium or planned community. Condominium and planned community HOAs are also regulated by Arizona statutes. Read and understand these documents. Also, be aware that some HOAs impose fees that must be paid when the home is sold, so it is important to ask if the purchase of the home will result in any fees. If you have questions about your rights and remedies regarding homeowner’s associations or community associations, please read the information provided at www.re.state.az.us/communityassoc.html
If purchasing a resale home in a condominium or planned community, the seller (if fewer than 50 units in the community) or the HOA (if there are 50 or more units) must provide the buyer with a disclosure containing a variety of information, including the principal contact for the association, assessments, the money held by the association as reserves and, if the statement is being furnished by the association, a statement as to whether the records of the association reflect any alterations or improvements to the unit that violate the declaration. See www.azleg.state.az.us/ars/33/01260.htm and www.azleg.state.az.us/ars/33/01806.htm for the laws detailing these requirements.
Title Report or Title Commitment
The title report or commitment contains important information and is provided to the buyer by the title/escrow company or agent. This report or commitment lists documents that are exceptions to the title insurance (Schedule B Exceptions). Schedule B Exceptions may include encumbrances, easements, and liens against the property, some of which may affect the use of the property, such as a future addition or swimming pool. Make sure you receive and review all of the listed documents. Questions about the title commitment and Schedule B documents may be answered by the title or escrow officer, legal counsel, or a surveyor. General information regarding title issues may be found at http://www.alta.org/consumer/questions.cfm or obtained from the title/escrow company employed in the transaction.
Unless a buyer is paying cash, the buyer must qualify for a loan in order to complete the purchase of a home. A buyer should complete a loan application with a mortgage broker or a mortgage banker before making an offer on a property if at all possible and, if not, immediately after making an offer. It will be the buyer’s responsibility to deposit any down payment and insure that the buyer’s lender deposits the remainder of the purchase price into escrow prior to the close of escrow date. Therefore, make sure that you get all requested documentation to your lender as soon as possible, for information on loans and the lending process visit the following web sites:
Ginnie Mae: http://www.ginniemae.gov/2_prequal/intro_questions.asp?Section=YPTH; HUD: http://www.hud.gov/Mortgage Bankers Association: http://www.mbaa.org/National Association of Mortgage Brokers: http://www.namb.org/
Home Warranty Policy
A home warranty may be part of the sale of the home. Buyers should read the home warranty document for coverage and limitation information. Be aware that pre-existing property conditions are generally not covered under these policies.
Affidavit of Disclosure
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 seller must furnish the buyer with an Affidavit of Disclosure. A sample form is located at www.aaronline.com/documents/affidavit_2002.pdf.
Lead-Based Paint Disclosure Form
If the home was built prior to 1978, the seller must provide the buyer with a lead-based paint disclosure form. Information about lead-based paint may be obtained at www.re.state.az.us/leadfacts.html or www.epa.gov/lead/nlic.htm.
County Assessor’s/Tax Records
The county assessor’s records contain a variety of valuable information including the assessed value of the property for tax purposes and some of the physical aspects of the property, such as the reported square footage (which should always be verified for accuracy). Information is available on county web sites:
Coconino: http://co.coconino.az.us/assessor/Maricopa: www.maricopa.gov/assessor and http://treasurer.maricopa.gov/parcels/Pima: http://www.co.pima.az.us/navigate.aspx?L1=1&L2=11 Yavapai: www.co.yavapai.az.us/departments/DepartmentIndex.aspOther counties: www.az.gov/webapp/portal
Professional Home Inspection Report
For the buyer’s protection, the importance of having a home inspected by a professional home inspector cannot be over-emphasized, regardless of whether the home is new or a resale. A home inspection is a visual physical examination, performed for a fee, designed to identify material defects in the home. The home inspector will generally provide the buyer with a report detailing information about the home’s condition. The inspector and the report will point out existing problems and possible potential problems. The buyer should carefully review this report with the inspector and ask the inspector about any item of concern. Pay attention to the scope of the inspection and any portions of the property excluded from the inspection. Home inspectors must be licensed by the State of Arizona. A list of certified home inspectors may be found at the Arizona Board of Technical Registration website, www.btr.state.az.us. Additional information on inspections may be found at the American Society of Home Inspectors web site, www.ashi.com, and guidance on hiring a home inspector may be found at www.realtor.com/basics/buy/inspnegot/hire.asp?gate=realtor&poe=homestore.
Termites and Other Wood Destroying Organisms
Termites are commonly found in some parts of Arizona. Investigating evidence of termites or other wood infestation is the job of the pest inspector. The Structural Pest Control Commission (“SPCC”) regulates these inspectors and can provide the buyer with information regarding past termite treatments on a property. The SPCC publication, What You Should Know About Wood Infestation Reports, can be found at www.sb.state.az.us/wir.htm. Additional information may be obtained at
COMMON PHYSICAL CONDITIONS IN THE PROPERTY A BUYER SHOULD INVESTIGATE
Every buyer and every home is different, so the physical property conditions requiring investigation will vary.
Repairs and New Construction
The seller may have made repairs or added a room to the property. For example, the property may have an obvious improvement, covered patio, or garage, or may have been remodeled. The buyer should feel comfortable that the work was properly done or have an expert evaluate the work. Request copies of permits, invoices or other documentation regarding the work performed. The Registrar of Contractors’ (“ROC”) publication, Hiring a Licensed Contractor, is available on the ROC web site at www.rc.state.az.us/Consumer_menu.html. The Arizona Chapter of the National Association of the Remodeling Industry may be contacted at http://aznari.com/. For information regarding permits, contact the city or county building department.
The inspector might recommend that you have the roof further inspected by a licensed roofer. If the roof is 10 years old or older, a roof inspection by a licensed roofer is highly recommended. See the ROC information on hiring a licensed contractor online at www.rc.state.az.us/Consumer_menu.html or the Arizona Roofing Contractors Association at www.azroofing.org.
Swimming Pools and Spas
If the home has a pool or a spa, the home inspector might determine that the cleaning system is not working properly or may exclude the pool or spa from the general inspection. It would then be necessary to have a pool or spa company inspect the pool or spa and/or evaluate any problem. See the Arizona Chapter of the National Spa & Pool Institute at www.azpoolspas.org.
Swimming Pool Barriers
Each city and county has its own swimming pool barrier ordinance. Pool barrier contact information for Arizona cities and counties may be found at www.aaronline.com/documents/pool_contacts.aspx. The Arizona Department of Health Services Private Pool Safety notice may be found at www.hs.state.az.us/diro/admin_rules/pool_rules.htm. The state law on swimming pools is located at www.azleg.state.az.us/ars/36/01681.htm.
Square footage on the MLS printout or as listed by the county assessor’s records is often only an estimate and generally should not be relied upon for the exact square footage in a home. An appraiser or architect can measure the home’s size to verify the square footage. A list of appraisers may be found at the Arizona Board of Appraisal, www.appraisal.state.az.us/Directory/directory.html. A list of architects may be found at the Board of Technical Registration (“BTR”), www.btr.state.az.us
Even if the listing or SPDS indicates that the home is connected to the city sewer, it should be verified by a plumber, home inspector, or other professional. Some counties and cities can perform this test as well. Pima Country: www.wwm.pima.gov/Docs/REQUEST%20FOR%20VERIFICATION%20OF%20SEWER.pdf
Septic and Other On-Site Wastewater Treatment Facilities
If the home is not connected to a public sewer it is probably served by an on-site wastewater disposal system (septic or alternative system). If the system was approved by a certain date, it must be inspected by a qualified inspector prior to transfer. Even if an inspection is not required by law, all systems should be inspected prior to transfer. A qualified septic pumper may be qualified to inspect a septic system; however, alternative systems should be inspected by a person with training and knowledge of the particular system. For information on current inspection and transfer of ownership requirements, contact the county environmental/health agency or the Arizona Department of Environmental Quality (“ADEQ”) at www.adeq.state.az.us/environ/water/permits/wastewater.html. For general information on maintenance of a septic system, go to http://www.septic-info.com/.
The soil in some areas of Arizona has “clay-like” tendencies, sometimes referred to as “expansive soil.” Although it is not very common for homes built on expansive soils to experience significant movement, it can be a major problem if it does occur. If it has been disclosed that the home has been built on expansive soil or if the buyer has any concerns about evidence of cracking, the buyer should secure an independent assessment of the home and its structural integrity by a licensed, bonded, and insured professional engineer. To investigate areas in Arizona where expansive soils exist, go to www.az.nrcs.usda.gov (search “shrink/swell”) or www.azgs.az.gov (“Geologic Hazards”). A list of state certified professional engineers and firms can be found at www.btr.state.az.us.
If it is disclosed there has been a fire or flood on the property, a qualified inspector should be hired to advise you regarding any possible future problems as a result of the fire or flood damage and/or any subsequent repairs. For example, if the property was not properly cleaned after a flood, mold issues may result. Your homeowner’s insurance agent may be able to assist you in obtaining information regarding fire, flood, or other past damage to the property.
Cockroaches, rattlesnakes, black widow spiders, scorpions, termites and other pests are common in parts of Arizona. Fortunately, most pests can be controlled with pesticides. Scorpions, on the other hand, may be difficult to eliminate. If the buyer has any concerns or if the SPDS indicates the seller has seen scorpions or other pests on the property, you should seek the advice of a pest control company. A source of information on scorpions may be found at www.desertusa.com/oct96/du_scorpion.html. For information on roof rats, which have been reported in some areas, go to www.maricopa.gov/envsvc/WATER/VECTOR/roofrats.asp. For information on termites or bark beetles, which have been reported some forested areas, see www.sb.state.az.us/.
Cactus Ferruginous Pygmy-Owl
The Cactus Ferruginous Pygmy-Owl is listed as an endangered species under federal law. For information on the Pygmy-Owl and its critical habitat, which may affect land use in certain areas, visit the following websites: Tucson Association of REALTORS®: www.tucsonrealtors.org/docs/pygmyowl.pdfPima County: www.co.pima.az.us/cmo/sdcp/sdcp2/PO/pygmy.html
Deaths and Felonies on the Property
An Arizona law states that sellers and real estate licensees have no liability for failure to disclose to a buyer that the property was ever the site of a natural death, suicide, murder or felony, see www.azleg.state.az.us/ars/32/02156.htm. This information is often difficult to uncover; however, the local law enforcement agency may be able to identify calls made to the property address.
Mold has always been with us, and it is a rare home that does not have some mold. However, over the past few years a certain kind of mold has been identified as a possible contributor to illnesses. Allergic individuals may experience symptoms related to mold. Mold growth is found underneath materials where water has damaged surfaces, or behind walls. A pamphlet, Mold in my Home: What Do I Do?, prepared by the Arizona Department of Health Services, Office of Environmental Health, states: “If you can see mold, or if there is an earthy or musty odor, you can assume you have a mold problem.” www.hs.state.az.us/phs/oeh/invsurv/air_qual/mold_contents.htm. The Environmental Protection Agency (EPA) and Centers for Disease Control and Prevention web sites also contain valuable information: www.epa.gov/iaq/molds/moldresources.html and www.cdc.gov/nceh/air pollution/mold/default.htm. Also see http://www.stopmold.org/
Other Indoor Air Quality Concerns
Radon gas and carbon monoxide poisoning are two of the more common and potentially serious indoor air quality (“IAQ”) concerns. Both of these concerns can be addressed by the home inspector, usually for an additional fee. As for the many other IAQ concerns, the EPA has a host of resource materials and pamphlets available at www.epa.gov/iaq/iaqinfo.html and www.epa.gov/iaq/pubs/index.html.
If the property boundaries are of concern, a survey may be warranted. For example, a survey may be advisable if there is an obvious use of property by others (i.e., a well-worn path across a property and/or parked cars on the property) or fences or structures of adjacent property owners that appear to be built on the property. For more information, visit the Arizona Professional Land Surveyors web site at www.azpls.org. A list of surveyors may be obtained from the Board of Technical Registration at www.btr.state.az.us.
Flood Plain Status
If the property is in a flood zone, an additional annual insurance premium of several hundred dollars may be required (check with your insurance agent about cost and coverage). If the property is in an area deemed high risk, the buyer may be required by the lender to obtain flood hazard insurance through the National Flood Insurance Program. Find details on flood plain status: Maricopa County: www.fcd.maricopa.gov/Resources/MapApplications.asp Pima County: www.dot.co.pima.az.us/flood/ Other parts of the state: www.azgs.state.az.us/flood_links.htm FEMA’s Flood Map Service Center: www.fema.gov/maps.
Homeowner’s Insurance (Claims History)
Many factors affect the availability and cost of homeowner’s insurance. Depending on the insurance company, these factors may include past insurance claims filed on the home being purchased, past insurance claims filed by the buyer on previous homes, and the buyer's credit score. Some insurance companies use a database known as the Comprehensive Loss Underwriting Exchange (“C.L.U.E.”) in their underwriting practices to track the insurance claim history of a home and of the person applying for insurance coverage. To reduce the risk of homeowner's insurance cancellation, a buyer should ask their insurance agent about the company's underwriting practices and request that their insurance agent confirm in writing the availability and cost of homeowner’s insurance early in any real estate transaction. And, although a buyer cannot directly obtain the claims history of a home, a buyer may ask the seller to provide a copy. However, be aware that obtaining a claims history or C.L.U.E. report on a home will not give a buyer all the necessary information to determine insurability, since not all insurance companies use this information or use it in the same manner. Homeowners may request a five year claims history from their insurance agent or purchase a C.L.U.E. report online at www.choicetrust.com or by calling 866/527-2600. For more detailed information on homeowner's insurance, please read "The New Reality of Property Insurance - What You Should Know" at www.aaronline.com/documents/insurance.pdf. For additional insurance information or to file a complaint against an insurance company, visit the Arizona Department of Insurance web site at www.state.az.us/id.
Other Property Conditions Plumbing:
Check functionality. Also, a national class action suit has been settled, providing relief for qualifying leaks in polybutylene pipe (PB). For more information, see www.pbpipe.com or www.aaronline.com/documents/polyb.aspx. Cooling/Heating: Make sure the cooling and heating systems are adequate. Arizona State Chapter affiliate of the Air Conditioning Contractors of America: www.acca-az.org/Electrical systems: Check for function and safety.
CONDITIONS AFFECTING THE AREA SURROUNDING THE HOME THE BUYER SHOULD INVESTIGATE
Every property is unique; therefore, important conditions vary.
It is often very difficult to identify environmental hazards. For environmental information, search the ADEQ web site at www.adeq.state.az.us. The ADEQ web site contains information regarding the locations of open and closed landfills (Solid Waste Facilities) at www.adeq.state.az.us/environ/waste/solid/other.html and wildfire information at www.adeq.state.az.us/function/about/wildfire.html, as well as air quality information, water quality information and more.
There are numerous sites in Arizona where the soil and groundwater have been contaminated by improper disposal of contaminants. To check if a property is in an area designated by the ADEQ as requiring cleanup, see www.adeq.state.az.us/environ/waste/sps/phx.html for available maps to view.
Although the existence of a freeway near the property may provide highly desirable access, sometimes it contributes to undesirable noise. To search for roadway construction and planning, go to the Arizona Department of Transportation (“ADOT”) web site at. http://www.azdot.gov/Highways/ Check ADOT maps to find the nearest future freeway routes and roads in the area slated for widening.
Crime statistics while an imperfect measurement at best, nevertheless provide some indication of the level of criminal activity in an area. To check the crime statistics for the cities of Phoenix, Tempe, Glendale, Mesa, Scottsdale, Chandler, Gilbert and Peoria, go to www.faxnet1.org. A visit or phone call to other law enforcement agencies may be required. For a list of all Arizona city links, go to www.azleague.org. To find crime statistics on their web sites, you may need to search for “crime statistics.”
Since June 1996, Arizona has had a registry and community notification program for convicted sex offenders. This information may be accessed at www.azsexoffender.org. Prior to June 1996, registration was not required, and only the higher-risk sex offenders are on the web site The presence of a sex offender in the vicinity of the property is not a fact that is required to be disclosed by the seller or agent.
Military and Public Airports
The legislature has mandated the identification of areas in the immediate vicinity of military and public airports that are susceptible to a certain level of noise from aircraft. The boundaries of these areas have been plotted on maps that are useful in determining if a property falls within one of these areas. The map for military airports may be accessed at www.re.state.az.us/airport.html; view maps for many of the public airports at www.re.state.az.us/airports/airportintro.html. These maps are intended to show the areas subject to the preponderance of airport-related noise from a given airport. Periodic over-flights that may contribute to noise cannot usually be determined from these maps.
Life in a forested area has unique benefits and concerns. For information on protecting your home from wildfire, go to: http://www.firewise.org/ or http://www.land.state.az.us/divisions/fire.htm . See also: Arizona Firewise Communities: http://cals.arizona.edu/firewise/Contact county/city fire authority for information on issues particular to your community.
Zoning/Planning/Neighborhood Services Phoenix: www.phoenix.gov/PLANNING/index.htmlScottsdale: www.scottsdaleaz.gov/Topic.asp?catID=1Tucson: www.ci.tucson.az.us/planning.htmlOther cities and towns: www.azleague.org
Although there is no substitute for an on-site visit to the school to talk with principals and teachers, there is a significant amount of information about Arizona’s schools on the Internet. Public and charter school information may be accessed at www.ade.state.az.us. The ADRE advises: “Call the school district serving the subdivision to Schools (continued): 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.” www.re.state.az.us/checklist.html
OTHER METHODS TO OBTAIN INFORMATION ABOUT A PROPERTY
Talk to the Neighbors
Neighbors can provide a wealth of information. Buyers should always talk to the surrounding neighbors about the neighborhood and the history of the home the buyer is considering for purchase.
Drive around the Neighborhood
Buyers should always drive around the neighborhood, preferably on different days at several different times of the day and evening, to investigate the surrounding area.
FOR ADDITIONAL INFORMATION, visit: Arizona Association of REALTORS® (“AAR”): www.aaronline.com (Consumer Assistance) Arizona Department of Real Estate (“ADRE”): www.re.state.az.us (Consumer Information) NATIONAL ASSOCIATION OF REALTORS® (“NAR”): www.realtor.com