Archive for October, 2010

Read Your Real Estate Contract Carefully

October 28, 2010

When a couple purchased a new Queen Creek home they received a color brochure from the builder showing the features of the builder’s homes. However, after moving into the home, two of the features, a dishwasher and sunscreens, were not in the home. They contacted the builder and the builder said the contract did not provide for a dishwasher and sunscreens and the sales price would have been higher if they were in the home. Under Arizona real estate law, does the builder have to put in a dishwasher and sunscreens?

In general, a brochure is only a marketing tool, and the contract will control the type of extras in the home that the builder is required to construct for a buyer. The homeowners should have confirmed in the contract that a dishwasher and sunscreens were included.

Note: If a marketing brochure makes a statement, however, such as “solid wood doors” but non-solid wood doors are installed, a buyer may have a claim against the builder if there is nothing in the contract to describe the type of door to be installed. A court would probably rule that a reasonable buyer had the right to rely on the builder’s representation that solid wood doors would be installed.

Is a Two-Day Notice for Inspection Required For Arizona Commercial Property Leases?

October 28, 2010

A property management company does mostly residential property management for owners of apartment complexes, but also does some commercial property management for several small office buildings. Under Arizona real estate law the property management company knows that to furnish a two day’s notice to the tenant before inspecting the tenant’s apartment. According to Arizona commercial property leases, is it necessary to furnish a two day notice to an office tenant before inspecting that office?

Under Arizona law a residential landlord must furnish two day’s notice of an inspection of a residential property such as a home or an apartment, and can only inspect the property during reasonable times. Arizona law imposes no such requirement upon commercial landlords, however, and a commercial landlord is entitled to enter a commercial property at any time to inspect the commercial property, e.g., the tenant’s office, under reasonable circumstances, unless there is specific language in the lease regulating inspections by the landlord.

Note: In general, residential leases are highly regulated under a public policy to protect “mom and pop” in their homes. For example, there are at least fifty Arizona statutes regulating residential landlords and tenants, plus the new federal law that generally allows residential tenants to stay in their home after foreclosure until the end of the lease term. On the other hand, there are only a handful of Arizona statutes regulating commercial leases. The reasons for this lack of regulation in commercial leases are that there is not a public policy to protect commercial tenants, and that, commercial landlords and tenants are theoretically “big boys” who can afford to hire lawyers and other professional advisors to negotiate the terms of commercial leases. An example of this distinction between residential leases and commercial leases is that Arizona law specifically prohibits the landlord from “locking out” a residential tenant for non-payment of rent, and specifically prohibits a landlord’s lien on the residential tenant’s personal property until the payment by the tenant of delinquent rent. The residential tenant cannot waive this protection. On the other hand, Arizona law specifically authorizes the “locking out” by the landlord of a commercial tenant, and specifically authorizes a landlord’s lien on the commercial tenant’s personal property.

Arizona Real Estate Law States Murder on Premises Need Not Be Disclosed to Buyer

October 27, 2010

A couple has been hearing some rumors that there was a shooting in their Phoenix home several years ago. The homeowners are a little concerned about the rumors and are considering contacting the seller to get more information. Is Arizona real estate law the same as California where this type of information needs to be disclosed by the seller, such as in the case of the Nicole Simpson/Ron Goldman murders sixteen years ago at that Brentwood, California home?

The psychological stigma of a murder or other violent crime occurring at a home is generally a material, adverse fact that would need to be disclosed by the seller and the real estate agents to the buyer. The landmark ruling is a 1983 California appeals court decision permitting rescission of the purchase transaction by an elderly lady who had bought a home in which a mother and three children had been murdered ten years earlier. In response to that California decision, however, California passed a statute limiting to three years the requirement of disclosure of a murder or other violent crime occurring in the home. Therefore, in California the seller of the home where the Nicole Simpson/Ron Goldman murders occurred would only have been required to disclose those murders to any buyer in the three years following the murders.

In 1995 Arizona adopted a similar statute (A.R.S. §32-2156) that does not require the seller to disclose to a buyer a murder occurring in the home. This Arizona statute also protects the real estate agents in the transaction. Unlike California, however, there is no time period in the Arizona statute. In other words, even if the seller and the real estate agents in the transaction learn of a murder in the home the day before closing, under this Arizona statute they have no liability for failing to disclose this murder to the buyer of the home. This Arizona statute has been amended several times since 1995 to not require disclosure by sellers and real estate agents of numerous other material, adverse facts that under common law would generally need to be disclosed to the buyer. These amendments include no requirement to disclose to the buyer a natural death or suicide in the home, any felony that occurred in the home, HIV/AIDS of the seller or any occupant of the home, and, most recently, any sex offender in the neighborhood.

Enforce CC&Rs Or Arizona Real Estate Law May Deem Abandoned

October 27, 2010

The developer of an Avondale subdivision completed all of their home sales two years ago and the understanding at the time was the homeowners would then became responsible for the enforcement of the CC&Rs regulating our subdivision. Since that time, however, there has been no enforcement of the CC&Rs, especially relating to alteration and remodeling of homes in the subdivision. The residents do not have a homeowners’ association (“HOA”) nor do they pay any HOA dues however some residents are concerned that property values in the subdivision will deteriorate rapidly unless an architectural committee is formed and the CC&Rs are enforced. Is there anything that the residents can do?

The CC&Rs should provide that the homeowners can establish an HOA and elect a board of directors to govern the HOA. The board of directors, or the architectural committee formed by the board of directors, generally has the power to enforce the CC&Rs with respect to alteration and remodeling of homes in the subdivision. One resident needs to take charge and organize the neighbors in order to establish an HOA and a board of directors, and then form an architectural committee. If the neighbors will not support the HOA, an individual homeowner generally can enforce the CC&Rs. The “bottom line” is that, if the CC&Rs are not enforced either by the HOA or by the individual homeowners in the subdivision, under Arizona and real estate law all of the CC&Rs may be deemed abandoned.