When real estate changes hands in Arizona, sellers have a legal obligation to make certain disclosures. These generally revolve around important facts, often known as “material” facts. In essence, the seller must disclose anything that would be important to the buyer and the value of the property.
It’s also important for sellers to remember that they must disclose the things they already know about the property. It’s certainly possible for there to be defects or issues that the owner is unaware of—but once they become aware of a problem, they are obligated to disclose it.
Land use issues
First, the way the land can be used is important. What is the property type? Is it in a commercial, industrial or retail zone? Are there any utility easements or access easements on the property that will have to be upheld after the transaction?
Environmental issues
Another area to consider is whether there are any environmental issues or hazards on the property. For instance, was asbestos used in the construction of the building? Is there lead paint? Are there underground fuel storage tanks? How have hazardous materials been handled on the property in the past? These issues can be especially important in industrial real estate.
Known defects
Finally, sellers must disclose any known defects. Maybe there’s water damage, structural issues with the foundation, or evidence of fire damage. Perhaps the electrical or plumbing systems don’t function properly. Maybe there’s damage to the roof that requires replacement. These are all examples of known defects that must be reported.
A commercial real estate transaction can be expensive and complicated, so it’s important to understand exactly what legal steps to take.