How It's Done Here (AKA, Arizona Real Estate Law)
Every state has different laws and practices regarding real estate transactions. Here are some items you should be aware of before selling your Arizona real estate. Information here is not intended to be legal advice. The following applies to ALL Arizona Real Estate, not just Verde Valley properties.
Covenant of Good Faith- Inherent in all contracts is the covenant of Good Faith. Basically, both parties MUST act in a forthright & honest manner in all dealings involving the contract. In other words, if you know something is wrong with the property that may effect its value or the amount of money one would pay, you must disclose that information to potential buyers. Failure to do so is interpreted as fraud by the court system.
Right to Rescission– There is no right to rescission in Arizona, unless you are selling vacant land to a buyer who is purchasing subdivided land, sight unseen. But, then again, see the section on the Affidavit of Disclosure.
Usury Laws- Usury law in Arizona does not limit the interest rate that can be charged to a buyer of real estate. If you carry paper, you may charge what the market will bear. Some area owner carry-backs are earning 14%. Average rate is between 6-10%.
Closings- You do not have to be physically present to sell property in Arizona. Everything can be handled by phone, fax, e-mail and US mail. I have handled the sale of entire estates for my clients via phone, fax & e-mail, including furniture and motor vehicles!
Water Rights- In the simplest manner of speaking, the ownership of most of Arizona’s water and the right to consume it is in question. A lawsuit regarding the ownership has been laboriously moving through the courts since the 70’s. In other words, just about all “water rights” have come into question as to who really owns them, regardless of whomever the legal owner currently is. Therefore, it is very important that all of your claims have been properly filed with Arizona Department of Water Resources.
Residential Rental Property Registration- If you are renting property you own in Arizona, you must register it as rental property with the county where it is located. If you do not reside in Arizona, you must appoint an in-state statutory agent. Fines and penalties are quite stiff if you fail to comply.
Septic Tanks & Transfers- If the Arizona real estate you intend to sell is served by a septic tank, it must be inspected and transferred to the new owner by filing papers with Arizona Department of Environmental Quality. Be aware that many of the septic tanks in many counties may be “illegal," and /or non– conforming to the current standards, and this may cause problems when trying to transfer or repair existing systems. It is probable that your tank will have to be pumped, and you will be expected to bear that cost in most situations.
Wells & Transfers- If the Arizona real estate you are selling is served by a domestic water well, The well must be transferred by filing paperwork with Arizona Department of Water Resources. Be aware that Yavapai county now has a 50 ft set back requirement from undeveloped properties and this may effect the parcels building envelope and/or effect it’s suitability for building.
Disclosure Affidavit- You MUST give this document to the buyer at least 7 days prior to close and AS SOON AS POSSIBLE! They will have 5 days from its receipt to investigate concerns and cancel the contract if not satisfied with the disclosures.
Failure to provide this document to the buyer and have it recorded altogether gives the buyer a FIVE YEAR RIGHT TO RECISSION on their purchase. Some AZ attorney’s are interpreting the affidavits language as an unlimited right to rescission. It is CRUCIAL this is executed in its’ proper and most up to date form.
Say your give the notarized affidavit to your agent before close of escrow, and the agent says he will give it to the title company to have it signed and recorded on the day of closing. The affidavit is signed and recorded and your home closes escrow. Two days later, the title company calls you and your agent to tell them the buyer is rescinding the contract, because the affidavit gives them a five day period of time to cancel the transaction for any reason. Now of course, this scenario is a bit improbable, but not impossible!!! Make sure you are not the person who tests this law in the courts. Execute this document immediately and ensure your buyer signs and DATES it immediately. Not all properties are required to file this affidavit- we'll know if you need one or not!
Your Choice of Real Estate Agent Can be Crucial- Because attorney’s are generally not used for Arizona residential real estate transactions, your agent will draft your contract. It's legally binding document, and, directly effects your nest egg. Your agent must not only completely comprehend it, they must attempt to foresee how a court may interpret it’s language, and the given situation that has arisen.
Hiring your best friend’s, second cousin who is a “nice guy” and has been in the business a couple of years, is not recommended. Your contract can have super serious consequences. A part time "dabbler" cannot possibly keep up with all the case law, local issues and National trends effecting Arizona real estate.
Rights and Responsibilities- Click Here for a plain language discussion of your rights and responsibilities as a seller of ARIZONA real estate. If you are selling your property through a licensed REALTOR® , you will almost certainly use the Arizona Association of REALTORS® Residential Resale Purchase Contract. Recent changes have significant consequences for sellers of Arizona Real Estate. Click here to be in the know about your contract BEFORE you are legally bound to it!