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SPDS is due within three (3) days of contract acceptance. This was effective with the contract update in February, 2017
`SPDS, ACKNOWLEDGEMENT: SIGN FOR ACKNOWLEDGEMENT OF RECEIPT ONLY For example: Leslie, I’m having an issue with signing off on the SPDS. There are sections that have not been filled out truthfully. For example, line #52-The house is in violation of building codes because there is an addition which was not permitted. Thank you. Attached please find the Original SPDS received and the Updated SPDS the Sellers provided on xx/xx/xxxx. Please sign each acknowledging only that you have received these required forms. Thank you.
SPDS, ACKNOWLEDGEMENT, BUYER WILL NOT RETURN SIGNED COPY: Q: In RSA you are requesting a signed copy of the SPDS from the buyer and it is their office policy to not send that back. I have included the email I received from the other agent about this. Can you please note this in RSA so that it does not show as incomplete? A: Hi, Greg. That's unfortunate for the Seller. In the future, you might consider advising the Seller to include a line in the CO stating that the Buyer will initial/sign the SPDS, Claims History and submit a clear, final walk through confirming that the premises is in substantially the same condition prior to COE. At this point it appears that all you can do is submit a missing paperwork form and attach a copy of the email from the Selling Agent. LONG REALTY THE FOX GROUP: I will not, however, be sending you the signed SPDS. Last year, my broker implemented a rule that we no longer send forms to cross sale agents that are not required by the contract. I have received the SPDS and the buyer has reviewed the SPDS. Please accept this email as acknowledgment of receipt. My broker has already had a discussion with the HomeSmart DB regarding this policy, but if you or she have further questions, please feel free to contact Lloyd Fox at 602-418-1153.
Q: I had send an email last week with a question about the SPDS and CLUE. The Seller is OfferPad and never resided in the property, so they are not providing these documents. Is there an additional form I need to submit or an additional step I need to take since I did not receive these forms from the Seller? A: It needs to be acknowledged in writing that the buyer agrees to waive the SPDS and Insurance Claims History. This can be done on page 8 of the pc (additional terms and conditions), or on an Addendum. The language would be something like "Buyer agrees to waive the SPDS and Insurance Claims History." There is also a form titled "SPDS Hold Harmless-Buyer" or "SPDS Hold Harmless-Seller" that we need to have our client sign (buyer or seller) when the SPDS and Ins Claims History are waived. Both forms are located on your RSA Portal under the downloads link. SPDS, BLANK SPDS: HOW HANDLE? SEE SPDS WAIVED BELOW. SPDS, CANCELLING ON SPDS: Q: I have a quick question that I would like to double check. I have a buyer that would like to cancel the contract because the SPDS delivered to us revealed many major problems such as the roof leaking, black mold, foundation issues and a previous flood. I just want to double check that I should check on the BINSR "Premises Rejected – Buyer disapproves of the items listed below and elects to immediately cancel the Contract." and then write buyer is canceling due to the previous mold, undetermined foundation issues and previous problems with the roof as seen on the SPDS. We do not want to pay for an inspection. I just want to make sure that I am not missing anything that would cause a loss in earnest money. A: You can cancel on the BINSR citing the buyers receipt, review and rejection of the Sellers Property Disclosure Statement wherein the seller disclosed significant material issues with the property which were previously unknown by and are unacceptable to the buyer. This includes xxxx, xxxx, xxxx, and xxxx. OR Write on BINSR: “Buyer hereby elects to cancel the purchase contract due to Buyers receipt, review and rejection of the SPDS wherein the seller disclosed significant, material issues with the property which were previously unknown by and are unacceptable to the Buyer. This includes xxxx, xxxx and xxxx. Section 4a of the purchase contract states: Buyer shall provide notice of any SPDS items disapproved within the Inspection Period or five (5) days after receipt of the SPDS, whichever is later.” SPDS—CHANGES DURING ESCROW: UPDATE SPDS, Q: Per our conversation Sunday April 29th with the flood/ leak situation. I asked them to update the SPDS. Since I’ve never done this before I wanted to make sure the last page of the attached updated SPDS is correct? If it is then would I have my buyer sign the last page as well? A: It appears to be correct. Yes, have your client sign right away and upload a copy of this into your transaction file. Your client now has five days to disapprove (cancel if that is what they wish to do). Also send a copy to the title company and let them know there may be a delay (or possible cancellation?). Also, remember that whenever there is a water issue, a mold issue could also develop. SPDS: CANCEL ON CHANGES DURING ESCROW: USE NOTICE/DISCLOSURE FORM: TITLE: CANCELLATION NOTICE FOR THE PROPERTY LOCATED AT 123 MAIN STREET, PHX, AZ. Use NOTICE/DISCLOSURE Form: LANGUAGE: “Buyer has received an updated SPDS from Seller Disclosing a previously unknown Federal Tax Lien (Or Whatever). Section 4f of the purchase contract states that Buyer shall be allowed five (5) days after receipt of updated SPDS to provide notice of disapproval. Therefore, as per their unilateral right, Buyer hereby gives notice of cancellation and requests that the Earnest Money be immediately refunded to Buyer.” Buyer hereby elects to cancel the purchase contract dated xx/xx/xxxx. As per their unilateral right in the purchase contract, section 4f, Changes During Escrow: “Buyer shall be allowed five (5) days after delivery of updated SPDS to provide notice of disapproval to seller. Buyer also requests that their earnest money be immediately refunded. Signed________________ Date___________. SPDS, COMMON SECTIONS: Miscellaneous, p4, line #144: Additions to Property, were permits required, were they obtained? (unpermitted additions).
SPDS: DELIVERY: Is uploading SPDS to docs tab in MLS considered delivery? NO! However, if they sign and return, then I would argue they showed “intent” and that there is an “implied acceptance of delivery” evidenced by buyer signing and returning…” (see aaronline article…) SPDS: DELIVERY: Disclosure: PC Sect 4a: Sellers Property Disclosure Statement (SPDS): Seller shall deliver a completed AAR Residential SPDS form to buyer within three (3) days after contract acceptance. Buyer shall provide notice of any SPDS items disapproved within the Inspection Period or five (5) days after receipt of the SPDS, whichever is later. SPDS, DIFFERENT TYPES: 1) Residential, 2) Vacant Land/Lot, 3) Rental, 4) Domestic Water Well, 5) Income Property, 6) Commercial SPDS, ERROR ON THE SIDE OF CAUTION! WHEN IN DOUBT, DISCLOSE! IF YOUR SELLER QUESTIONS IT, DISCLOSE! SELLER MUST DISCLOSE IF THEY HAVE KNOWLEDGE!
SPDS, FAILURE TO DISCLOSE: Q: What's the best way to handle a situation when we receive seller's SPDS, and we notice they failed to disclose items? In this case, we and the buyer notice that there was airplane and train noise? Isn't the whole purpose of SPDS to disclose? How do we as buyer's agent's protect ourselves and the Buyers when Sellers don't fully disclose? A: Have a conversation with the listing agent and voice your concern, ask if they would like to amend. The SPDS protect the seller more than anyone. It might have been an over-sight, the buyer will have to satisfy them selves during their due diligence period. SPDS/FAILURE TO DISCLOSE/INTENTIONAL MISREPRESENTATION/FRAUD: “The concealment of a pertinent fact to induce another party to act to their detriment.” SPDS: HOLD HARMLESS: SELLER: If your seller will not provide a SPDS or Ins Claims History, you will have the seller sign the SPDS-Hold Harmless form which is on your RSA portal in the downloads link. There are two versions of the Hold Harmless, one for seller and one for buyer. Make sure your client signs the correct version of the Hold Harmless. BUYER: If your buyer waives receipt of the SPDS, have the buyer sign the SPDS-Hold Harmless Buyer which is on your RSA Portal in the download link. There are two versions of the Hold Harmless, one for seller and one for buyer. Make sure your client signs the correct version of the Hold Harmless. SPDS, HOMESMART SPDS REQUIREMENTS IN FILES (PER JANE DUTRA): If our agent represents the buyer and writes in the contract that the SPDS is being waived, then we request the SPDS Hold Harmless - Buyer. If our agent represents the buyer and the seller counters that there is no SPDS - we accept that. If our agent represents the buyer and submits the SPDS Hold Harmless - Buyer but not waived in the PC or CO, then we request them to submit an addendum specifically stating they are waiving receipt of the SPDS. Both buyer and seller should sign the addendum. SPDS: INITIALS REQUIRED…? ANSWER: NO! INITIALS ARE NOT REQUIRED ON SPDS. NICE TO HAVE, BUT NOT REQUIRED FOR HOMESMART. LONG REALTY ASSHOLE WILL NOT RETURN A SIGNED COPY...WHAT’S HIS NAME? SPDS, LIMITED KNOWLEDGE: “Trustee is selling property as part of an estate, has never occupied the property and has limited knowledge regarding the property and Seller Disclosures.” “Seller further acknowledges he/she is not relieved of the legal obligaton to disclose all known material latent defects to the Buyer.” OR “A Seller Property Disclosure Statement (SPDS) cannot be provided for this transaction as the seller recently passed away and no other person has the information, background or knowledge about the property to provide the information on this document.”
Tenant Buying Rental From Landlord: Buyer & Seller acknowledges and agree that there will not be an SPDS or Insurance Claims History for this transaction as buyer is completely aware of the condition of the home due to the fact that Buyer has occupied the property for the past nine years.”
SPDS, PRIOR INSPECTION, SHARE PRIOR INSPECTION?, UPDATE, ATTACH PRIOR INSPECTION, SPDS SELLER USE NOTICE FORM: Language for Notice Form: “Prior inspection report is attached for buyers use and review. This prior inspection should not replace and should not be considered as buyers primary inspection and is being provided as a Disclosure Supplement to the SPDS.” (Q: In the meantime could you send me the inspection report from the previous contract? Thank you! A: Seller declines to send the inspection report from previous buyers contract). QQ: Hi! I’m representing a buyer on a home that was under contract a month ago and had an inspection. I thought a seller had to share the inspection report if the buyer requested it – is this not the case? See below- I requested it and she is declining to send it. AA: Hi X, HomeSmart's policy when we are the listing agent is to share the prior inspection report with the new buyer...not to replace the new buyers own inspection, but to protect the seller by giving "full disclosure" to the buyer...While that is our policy, it may not be the policy of other brokers, and it is not a requirement in the purchase contract. So you can certainly ask for a copy of the prior inspection, but there is no provision in the contract that says they "must" provide a copy to your client. Hope this helps, Jeff.
SPDS, PUBLIC REPORT REPLACES SPDS WITH NEW BUILDS: SEE CHARTS AT BOTTOM OF THIS PAGE
SPDS, REMODEL DISCLOSURE LANGUAGE: Line #144, new quick code, REMODEL: (see quick code): EXEMPTION LANGUAGE: Cosmetic Remodel completed xx/xx/xxxx. Nothing structural, no permits required. OR Backyard flatwork, patio work, outdoor BBQ, nothing structural attached to the home. OR Seller will need to disclose on SPDS beginning on line #144 scope of work, whether permits were required, obtained, etc. AZ State Law requires any remodeling/repair that costs over $1000 be completed by a licensed contractor. It is up to the seller to comply, or disclose on the SPDS otherwise. So to answer your question, yes, licensed contractors are required.
SPDS: REQUIRED…? Q: Hi Jeff, I’m selling one of my parents homes in Avondale, they never lived in the property, it was rented out for 8 years, are we required to fill out a spds? Or, can we waive the spds? A: YES We should always encourage the seller to deliver a completed SPDS even if it was a rental property. Sellers are required and have a legal obligation to disclose any material information about the property and the Sellers Property Disclosure Statement is designed to help them with that. Pursuant to the Contract, the seller is obligated to disclose all known material latent defects that materially and adversely affect the consideration to be paid by the buyer. The SPDS will evidence the fact that the seller has made these required disclosures. In addition to informing the buyer, the SPDS can help "shield" the seller from possible future liability, that is as long as the seller made complete, detailed disclosures it would be difficult for the buyer to come back and say "they were not aware" or "were not informed" of material information concerning the premises. NOTE: If a listing states that a SPDS is not available, or will not be provided, a buyer’s broker should provide the buyer with a blank copy of the SPDS form, which will enable the buyer to make an informed decision regarding whether to waive the SPDS. In these circumstances, a buyer’s broker would be wise to obtain the buyer’s written acknowledgment of receipt of the blank form and submit a copy of that to the Agents transaction file. See SPDS Waived Below: ADRE website link to SPDS Article, “Every Buyer Is Entitled to an SPDS” by Michelle Lind: https://www.azre.gov/PublicInfo/Documents/Every_Buyer_Is_Entitled_To_A_SPDS.pdf
SPDS, UPDATE? RELEASE PRIOR SPDS? SHOULD SELLER PROVIDE PRIOR SPDS? IF FLIPPER, OR OWNED SHORT TERM) (LESS THAN 1 YR, 6 MONTHS) Still need to disclose material information. Update SPDS if/when remember things, disclose past repairs (even if years ago, ie, slab leak).
SPDS, SIGNATURES, WRONG SPOT: SELLER INITIALED IN BUYERS SPOT! OH SHIT! : Q: Seller accidently initialed in buyers spot on all pages. A: As for the SPDS initials, just ask the Buyer Agent to have the Buyers initial under where your clients initialed when the time comes.
SPDS, UPDATE REQUIRED? Q: Hello, Can you tell me how long the SPDS is good for? I can't remember if it needs to be updated every 3 months or 6 months. The signed SPDS from my sellers is 4 months old on the date we got an accepted offer. A: There is no requirement or provision in the contract that says the SPDS must be updated at any certain point in time. However, it should be updated whenever there is a change in the premises or change in the disclosure(s) as they are currently written. Basically, on an "as needed" basis. Also see Section 4f of the Purchase Contract, Changes During Escrow.” SPDS, UPDATE SPDS, WHEN UPDATE?: Q: Hi there... when does the seller initial line #285 on the spds? A: Only when something has changed or when there is new or additional seller information that would require additional seller disclosure(s). Other than that, there is no "automatic" update required. SPDS, UPDATE SPDS? Q: MOLD was discovered during inspection, does this extend the inspection period and must the seller now update the SPDS? A: Hi x, NO, this does not extend the inspection period. You would need to prepare an addendum and have the parties sign that acknowledging that they agree to any extension(s). Importantly, this does not necessitate the seller to update the SPDS as the parties now have constructive knowledge regarding the mold along with everything else the inspection revealed. However, the seller would be obligated to disclose the discovery of mold to the next buyer if this transaction is cancelled and does not close. You might be able to leverage this fact to the buyer’s favor since it would probably create a negative perception of the property if the seller has to disclose past mold contamination to future buyers even if it was remediated. SPDS: UPDATED, SPDS WAS UPDATED...DOES 5 DAYS TO DISAPPROVE TRUMP COE WHICH WAS TO OCCUR TOMORROW? (IVANxVALDEZ case study$2MM ) DEPENDS: Per new Updated SPDS and On-Site Water treatment Addendum, my client has 5 days to decide whether to continue or not with this purchase. Because of this issue being cause by the seller (knowing or unknowingly), 2 days prior to COE, my client is requesting for a fair compensation of what it would take for him, to connect the property to the city sewer system. We were able to get a rough estimate of $25,000.00 to connect the property to the city sewer line. My client is willing to continue with the purchase of the property, if he gets a compensation deducted from the purchase price of $25,000.00 to a reduced purchase price of $2,075,000.00 A; Ivan, we called the legal hotline to get another opinion on this...we all feel that the buyer will have the full five days to disapprove even if we go past COE tomorrow and get a CURE for failure to close on Thursday. This means the buyer has until Saturday at 11:59pm. If we get a CURE Thursday for failure to close tomorrow, that CURE would expire Sunday at 11:59pm. Obviously the timelines are tight. FYI, Legal thought it would be nice to get an extension on COE to have the extra time to sort it out, and that the seller might give us that as a professional courtesy since they are the ones who caused the issue. Not sure if they will grant an extension or not but might be worth a shot... SPDS, WAIVE SPDS ON VACANT LAND: Q: Representing Buyer on a land purchase from AV Homes. They will not be building for my buyer, just selling the lot in their subdivision. There is no SPDS, do I need to have the Buyer sign off on the SPDS Hold Harmless? He has a Public Report. A: Hi X, our SPDS Hold Harmless applies to Residential, not vacant land, so you will not need to have them sign that. You will need to waive the Vacant Land SPDS, I would do that on page 8 of the Vacant Land/Lot Purchase Contract, say something like "Lines #143-144 are hereby waived from this Purchase Contract", or something similar.
SPDS WAIVED: “Buyer agrees to waive receipt of SPDS and Insurance Claims History Report.”
SPDS WAIVED: LANGUAGE IF WAIVE SPDS: You should also consider having the buyer sign an addendum stating something like "Should Buyer waive the SPDS , the Buyer does so against the advice of HomeSmart. Buyer agrees to defend, indemnify and hold harmless, HomeSmart, it’s Designated Broker and Agent, against any and all claims that may be made regarding the property and its condition." You have submitted a SPDS Hold Harmless form but the SPDS has NOT been waived in the purchase contract. Please submit an addendum which states that the Buyers are aware that the Seller will not be delivering the SPDS. Thx!
SPDS WIAVED: WAIVED SPDS...WHAT IS THE PROCESS TO WAIVE THE SPDS WHEN WE REP BUYER? Q: I'm representing buyers purchasing a home from their parents that they've been living in since last July. If they waive the SPDS, do I submit a blank signed by the buyer copy? A: 1) If the buyer agrees to waive receipt of the SPDS, that must be noted in the purchase contract or counter offer, or on an addendum, 2) We will then have our buyer client sign a HomeSmart Form titled "SPDS Hold Harmless-BUYER,” 3) It's always a good idea to give the buyer a blank copy of the SPDS and have them read, initial/sign to acknowledge they are aware of the contents and the importance of the SPDS. It’s also a good idea to submit a copy of that to your transaction file.
AFFIDAVIT OF DISCLOSURE
One last follow up on this, the question came up recently as to whether it was applicable to just the Residential PC and/or the Vacant Land PC...it is a Disclosure item in both as you can see from the following screenshots. We will also have the broker email canned response updated to address this question from agents within the next day or so...Please let me know if you have any further questions. Thanks, Jeff (Attachment, aaronline FAQ’s)
Vacant Land/Lot Purchase Contract:
RESPECTING EXCLUSIVE AGREEMENTS OF OTHER BROKERAGES Just a quick note, I have had two calls since yesterday from agents wanting advice on how to counsel a seller who wants to cancel a listing agreement with another brokerage. The quick answer is we can't and our agent should not be having this conversation with anyone who has an exclusive agreement with another brokerage. The only thing an agent should say to the seller regarding that is they need to work it out with their listing agent. SOP 16-6 expands on that but agents need to be cautious about giving any type of advice to a non-client.
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SPDS CASE STUDIES: |
