REAL ESTATE LAW UPDATE
December, 2002

AFFIDAVIT OF DISCLOSURE FOR SALES
OF UNSUBDIVIDED LAND GETS AN UPDATE

By Nathan B. Hannah

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You may recall that about two years ago I reported on a new Arizona statute that requires all sellers of unsubdivided land in unincorporated areas to furnish to the buyers, at least seven days before the transfer of title, an affidavit of disclosure. The requirement applies to any sale of land that is outside the limits of a city or town and is not in a recorded subdivision. The Arizona Legislature in its recently concluded session did some fine-tuning of the statute and came out with a new, approved form for the required affidavit.

The form of affidavit has been codified in Arizona Revised Statutes §33-422, and requires the seller to "certify under penalty of perjury" the following information, "according to [his/her] best belief and knowledge":

1. Whether there is legal access to the property.
2. Whether there is physical access to the property.
3. Whether the legal and physical access to the property are the same.
4. Whether the road to the property is publicly maintained, privately maintained or not maintained, whether there is a road maintenance agreement, and a statement that if the roads are not publicly maintained, it is the responsibility of the property owners to maintain the roads and that roads that are not improved to county standards and accepted for maintenance by the county are not the county's responsibility.
5. Whether any portion of the property is located in a FEMA designated regulatory floodplain.
6. Whether water, sewer, electric, natural gas, single party telephone or cable television services are currently provided to the property.
7. Whether the property will be served by a private well, a shared well or no well, and if it is served by a shared well, whether the shared well is a public water system, as defined by the Safe Water Drinking Act (42 United States Code Section 300f).
8. Whether the property has a septic tank or will require installation of a septic system, and whether the septic system has been inspected.
9. Whether the property has been subject to a percolation test.
10. Whether the property meets the minimum applicable county zoning requirements of the applicable zoning designation.
11. Whether the sale of the property meets the requirements of A.R.S. § 11-809 regarding land divisions. If those requirements are not met, the seller or property owner shall disclose each of the deficiencies to the Buyer.

The predecessor statute to A.R.S. § 33-422 was adopted by the Arizona Legislature as part of the legislation known as "Growing Smarter Plus." The new statute became effective earlier this year.

The form of affidavit adopted by the Legislature incorporates some of the features of the form previously produced by the Arizona Association of Realtors ("AAR"). The new form, like the AAR form, includes a blank line labeled "Explain" after some of the questions. The reason the AAR gave for inclusion of the blank line for explanation is that the predecessor statute did not cover a situation where the seller does not know and does not have access to information that must be disclosed. AAR suggested that if the seller does not know and does not have access to information required to be disclosed, the seller should indicate that the information is unknown on the explanation lines of the form.

The new form is still less than perfect. There remains the problem that it may be impractical to determine some of the information that must be disclosed on the form. The question of whether or not a parcel has legal access, for example, is a legal question that can require a lawsuit to answer. The same could of course be true of the question of whether or not the property complies with the zoning requirements or the statute regarding land divisions.

On a few of the questions the new form gives the property owner the option of checking a box labeled "unknown," which is a better approach than attempting to explain circumstances that don't fit the questions. An alternative as to those questions that don't include the "unknown" choice would be to answer in the negative if there is any doubt.

The statute does not specify any penalty for failure to comply. The statute does, however, provide that the buyer may rescind the transaction within five days after the affidavit of disclosure is furnished. The statute also requires that the seller record the affidavit at the same time as the deed transferring the property to the buyer.

The title companies have incorporated the requirements of the statute into their procedures for closing sales of unsubdivided land in unincorporated areas. Preliminary title reports on such land now contain a legend stating that the property appears to be subject to the statute and that the affidavit must be furnished by the seller prior to closing. Sellers of such land should be prepared to provide the required affidavit to the buyer (and to the title company as well) at least seven days prior to closing, as required by the statute, in order to avoid a delay in the closing.

 

This communication is designed to bring legal developments of interest to the attention of our clients and others. It should not be relied upon as a substitute for specific legal advice in a particular matter. For further information on any of the subjects discussed, or for legal advice in connection with any particular matter, please contact us.