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Whether you intend to sell or purchase a home, making an informed decision is what matters. Buying and selling residential and commercial properties involves disclosing material facts in real estate. A seller readily supplies these facts to buyers, ensuring they have the necessary information to purchase or move on.

Disclosing the information is not just good, clean business. It is Arizona state law. Scottsdale’s real estate lawyer from Anthony Law Group digs deeper into the topic.

What Is a Material Fact?

If you plan on putting your property on the housing market, discuss it with your listing agent in depth first. Sellers have a responsibility to disclose material facts about their land when selling it on the property market. What exactly is a material fact?

Material facts are information about the property history, attributes, and known defects that could influence a buyer’s decision and the house’s value. For example, you might list an old house that features lead-based paint. This defect could lower the property value and a potential buyer’s purchasing decision.

You must disclose this fact openly during the sales transaction. Otherwise, Arizona law treats omission like fraud. Written disclosures ensure a potential buyer knows all of the physical flaws and defects with the property that may affect what they can do with the property.

What Are Material Fact Disclosure Requirements?

It’s important to disclose all the necessary information. That said, you might wonder whether you should list every detail about your property. Fortunately, Arizona law allows you to omit some defects, such as:

• Violent crimes that took place in or around the area: Many states have publicly available information regarding felonies and other serious crimes and where they occurred. Buyers can look up the property’s public history to learn more.
• Whether an owner or related party died on the property: You do not have to disclose natural or violent deaths that occurred on your property.
• A previous owner’s health conditions: Property owners are entitled to personal privacy when selling their homes. Therefore, you can keep health concerns and diseases that don’t transmit through shared living spaces, like AIDS or HIV, to yourself.
• Whether a registered sex offender lives nearby: Buyers can practice due diligence and find information about neighboring sex offenders on public registries.

Essentially, you don’t have to disclose private health information or publicly available criminal activity when you sell your property in Arizona. However, honesty is always a good policy. You should answer truthfully if a buyer asks for disclosure regarding the above topics, with your medical information as an exception.

So, what material facts in real estate should you disclose? The short list includes:

• General property information: Real estate agents typically add this data to the property listing. It includes the number of rooms, square footage, year built, and other typical information.
• Wildlife and pest treatments: If you had to treat the property for bed bugs, bee swarms, or fungus, you must let the buyers know. A more extreme example is previous activity from rabid animals. The new owner may hold you liable if one dog gets bitten on their purchased property.
• Structural integrity: Sellers must disclose serious defects, like asbestos, lead paint, or shaky foundations. These issues affect what a buyer must do to fix the property and the final price.
• Available amenities: As a seller, you must let interested parties know about any historical problems concerning the electricity, sewage or septic connections, plumbing, and HVAC systems.
• Unpermitted construction: If you or a previous owner built structures without pursuing the proper permits, you must provide full disclosure regarding these activities.
• Hazardous materials: Sometimes, a property owner will damage the soil due to dangerous elements like radon gas. This gas can infiltrate buildings and significantly impact the real estate contract. Disclose this and other potentially harmful materials present on the property.
• Seasonal issues: A seller should list property concerns that may change with the seasons, like soil erosion during rainy periods or drainage issues following droughts. Home or property damage may occur because of these natural causes.
• Other influential material facts: This category covers other disclosed defects that don’t necessarily fall within the above categories. For example, you might want to add that your property is located on an ancient burial site here.

What Happens to a Seller or Real Estate Agent Who Fails to Disclose Material Facts?

If you have not disclosed the above-listed examples or other material facts, you could face a lawsuit from the buyer. Selling a property with an undisclosed defect is risky business. While many lenders require home inspections to protect buyers and themselves from material defects, some issues can lay dormant for years before making themselves known.

An Agent or Seller Who Fails to Disclose Information Could Face Lawsuits

If you have not disclosed every required detail, you could face lawsuits from the buyer. Both sellers and agents can be charged with misrepresentation, false advertising, or fraud. The evidence and court system will determine whether the failure to disclose was intentional or due to negligence.

Once the court rules that the agent or seller failed to adequately inform the buyer, the penalty might require that the defendant pay damages. Sometimes, the court might nullify the original contract and rule that the buyer returns the property to the seller while the seller gives the original price paid back to the buyer.

Disclosing Material Facts in Real Estate Protects Agents, Buyers, and Sellers

You might think that disclosure of each material fact only benefits the buyer. However, when you ensure every supportable fact is disclosed, you also protect yourself from liability and damages. A real estate broker or agent can also maintain their integrity and license. Arizona real estate lawyers identify each material fact that affects the property’s value, saving you from future consequences.

Consult With Anthony Law Group to Protect Potential Buyers

Buyers and sellers alike should practice due diligence during real estate transactions. Disclosing material facts in real estate is part of that process. Anthony Law Group can help you navigate honest property sales whether you are looking for a new home or becoming a seller of real estate.

Call 602-362-2396 to consult with our real estate lawyers today.