Archive for November, 2010

Use Beneficiary Deed For Arizona Real Estate Property Transfer Upon Death

November 30, 2010

Parents purchased a home in Chandler for their daughter and her children. Both the title to the home and the mortgage loan are in the parents/homeowners names because the daughter is not financially savvy and do not want to transfer the home title to her now. However, other than this home, the parents/homeowners have few other assets and would like to make sure that the title of the home gets transferred to their daughter after they pass away.

The parents/homeowners should contact an Arizona real estate law attorney and execute and record a beneficiary deed transferring the home to their daughter after they both pass away. A.R.S. § 33-405 authorizes the use of a beneficiary deed, and even provides the form for a beneficiary deed. The parents/homeowners should be able to complete this form, and then record the beneficiary deed with the Maricopa County Recorder’s Office.

A.R.S. Section 33-405 also has a form for a revocation of a beneficiary deed. If the parents/homeowners change their mind about their daughter getting the home, they can complete and record this form. clgz05

An Arizona Real Estate Special Warranty Deed Limits Sellers Liability

November 30, 2010

A man bought a home in Chandler from a bank after the bank acquired the home at a foreclosure sale. The new homeowner received a special warranty deed from the bank. Not knowing what the special warranty deed was, he assumed it was the standard deed for homes. However, his neighbor received a general warranty deed when he bought his home last year. The homeowner is unfamiliar with Arizona real estate law and is wondering why they have different deeds in the same Chandler subdivision?

Under a general warranty deed the seller warrants that the title being transferred to the buyer is valid and free of any title defects back to the beginning of time. A special warranty deed warrants title only for the time period in which the seller owned the real property. For example, if there was a title defect before the bank acquired the home at the foreclosure sale, the bank would not have liability to the buyer under a special warranty deed but would have liability to the buyer under a general warranty deed. Therefore, in order to limit liability a bank that acquires any real property at a foreclosure sale typically furnishes only a special warranty deed to the buyer. The distinction between a general warranty deed and a special warranty deed is generally immaterial if the buyer has adequate title insurance. In other words, if a special warranty deed is furnished, but there is title insurance available to cover any defect in title, the buyer should be able to recover damages from the title insurance company for most defects in title, including those defects in title that occurred prior to the seller acquiring the real property.

Note: The standard Arizona residential contract provides for a general warranty deed from the seller. In most commercial transactions, however, the seller only executes a special warranty deed. clgz05

In Arizona, Adverse Possession Not Usually Granted Against Government

November 29, 2010

A homeowner recently received a notification from the Arizona Department of Transportation that his fence is blocking ADOT’s highway right-of-way. The homeowner had fenced off this right-of-way least 10 years age, but ADOT is demanding that the fence be removed from the right-of-way. Is there an Arizona real estate law that allows ADOT to force the removal of the fence after it has been up for more than 10 years?

Generally, title to any real property interest such as a right-of-way owned by the state or other governmental entity cannot be acquired by adverse possession. Therefore, even though ADOT has not used the right-of-way for more than 10 years, ADOT probably can require the homeowner to remove the fence.

Note: The principle of adverse possession goes back to early English common law. The theory is “use it or lose it.” In other words, if the landowner is not using the land and another person is using the land without the landowner’s permission, the other person after a reasonable time (in Arizona generally 10 years) should be entitled to ownership of the land. clgz05

AZ Real Estate Broker Entitled to Commission if Contract is Mutually Cancelled

November 29, 2010

A contract was signed to sell a home in Goodyear. The buyer qualified for a new loan and, with the exception of minor repairs that the homeowners fixed, the buyer was satisfied with the home inspection. Two weeks before closing, however, the buyer contacted the sellers saying he no longer wanted to buy the home. As it turned out the sellers were no longer anxious to sell the home, so they agreed with the buyer to cancel the sale. The listing broker was contacted to cancel the transaction, and she said that she was entitled to her real estate commission. The sellers are fine to compensate the listing broker for her time and expenses, but have refused to pay the full commission. Is this an Arizona real estate law that the listing broker receives her full compensation?

While it is not a law, but the general rule is that a listing broker has earned a commission if the broker produces a ready, willing and able buyer at a price agreeable to the seller. If there are any material contingencies such as financing or a home inspection, however, the buyer is not a ready, willing and able buyer until the material contingencies are removed. Assuming that all material contingencies have been removed in this case the listing broker earned her real estate commission. The fact that seller and buyer mutually cancelled the sale does not affect the listing broker’s right to her real estate commission. Furthermore, the buyer’s broker has a claim against the listing broker for any “co-brokerage” commission offered by the listing broker in the Multiple Listing Service. clgz05