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UNPERMITTED ADDITION, SQUARE FOOTAGE: CASE STUDY: Q: So I am getting ready to take a listing. Sellers says oh by the way the tax records are wrong in 1985 my parents added a BASEMENT and additional Master bed and bath adding about 1000 sq. ft. Where do I even start with this? Do I have them go to the City of Chandler to have it back permitted? Do we try to sell without doing this? Not even sure how we would comp it out. Any suggestions is greatly appreciated. A: Hi X, I'd just list it at the higher sqft number and then state "Per Owner" on MLS. They don't have to go thru the permitting process if they don't want, they just need to disclose whether or not permits were ever pulled. Then it's up to the Buyer if they're comfortable with that. You're right about comps, especially with an unpermitted addition. You may want to suggest to them that they get an independent appraisal since it's such a unique property. That's always the best solution in a situation like this. KF. UNPERMITTED VS PERMITTED: Q: Many years ago here in Sun City a previous owner of a property I listed converted a covered patio into an extra 180 sq ft of beautiful interior living space. QUESTION #1: How would I go about finding out if a building permit had been pulled when the conversion was done? I contacted the Maricopa County Planning Office but they have not replied yet. Is there someone else I should be contacting? QUESTION #2: What are the implications for a new buyer if no permit was pulled back then? A: Hi X, Typically it would be the city planning dept to check on permits, but since Sun City is not incorporated I believe permits would be applied through the county, so keep pursuing that. Line #144-155 on the SPDS asks the seller about additions, permits, etc, so the seller will have to disclose whatever knowledge they have regarding this, such as "Tax records to not reflect the unpermitted addition" or something similar. You should also consider having similar verbiage in the private remarks section of the MLS such as "Tax records to not reflect the unpermitted addition" or something similar. It appears that would account for the discrepancy in the sq ft. I think you can still use the neighboring homes as comps but be prepared in case a buyer tries to negotiate the price down because of the tax records sq ft differential. UNPERMITTED ADDITION? I will soon be listing a property at 1906 E. Mitchell in Phoenix and have a question about the square footage. The previous sale stated 2,107 square feet and included "Per assessors website, it states 1,602 sf and Added Area: Not Listed (505 sf)." in the semi-private remarks. I have of course looked it up on the assessor's website and it states 1,924 sf living area. There have were no additions since the last purchase. Is there somewhere else I should be looking for assessed square footage? “The tax record is most common, unless the seller has an appraisal that shows the sq ft, and you could use that if it is favorable to the seller, but you MUST DISCLOSE any discrepencies. Other sources include builder records, owner measured, etc. If the tax record shows 1924 sq ft, I would go with that unless, as I noted, there is an appraisal available from the seller. Prior listings may also contain erroneous information.” Perfect, thanks Jeff. Is there anywhere else within the tax record that I should be looking, besides "living area"? No, that's about it. I think there is a line item in the tax record which shows "added" areas or something like that. It should all be included in the total though. "Tax Records do not reflect the unpermitted Addition" Seller must DISCLOSE in SPDS. Listing Agent must DISCLOSE in MLS. See SPDS, p4, Miscellaneous, line #144, Additions to Property OR (When updating SPDS or disclosing in MLS when tax record reflects less square footage than an/your appraisal): To clarify, square footage in County Tax Records is X, and the appraisal shows Y. Tax records may not reflect an/the unpermitted addition.” UNPERMITTED ADDITION Buyer wants to purchase a home that tax assessor has at 2139 sf. LA says that previous owner added a 400 sf addition of a bedroom and bath. No other information - says when home refinanced the appraiser listed sf at 2539 sf. Where can I find out if the addition was permitted? Q: Current owner has no paperwork or other information. The addition is seamless and looks like part of the home with finishes, textures, materials etc. Please advise. A: Hi Karen, you should be able to contact the City Planning and Zoning for the municipality that the property is in, and they should have records of any permits for the property. QQ: I searched the website - no permits turned up. Seller has no records - it was done before she purchased. What do you suggest I tell my buyer? She is a cash buyer - no appraisal will be ordered. AA: I'd probably hire an appraiser independently to see what their thoughts are. The concern is that when she goes to sell it, this issue will come back up and she'll have to deal with it then. Make sure she's aware of that, and that you have a candid email to her explaining the downside. It's not the end of the world if the addition was so nicely done, but without permits she may not get the value for it when she goes to sell. You don't want her to say at that point that you never mentioned that possibility to her. KF QQQ: She is an experienced investor, so she knows the downside that it may weigh on her value going forward. I'll get it in writing. Karen AAA: (Hi Kelley, Have the Buyers check thru the city if any addition is permitted. It's probably the City Planning and Zoning department. KF) Q: Our buyer obtained contract acceptance on a home yesterday, which has unpermitted additions to the home (completed 3 years ago). Will you please give me an idea of the potential problems our buyer may encounter in purchasing a home this home (additions are about 335 sq. ft., including 2 rooms + one car garage). Our buyer doesn't care that the additions are unpermitted and just wants the home. This has been disclosed on both the MLS listing and again in the SPDS from the seller. We have informed the buyer that he will, of course, need to disclose this down the road, when he sells the home. Are there other issues if he does not obtain the permits (after the fact) from the City? Tax records show the original square footage, and I wonder if Maricopa County could come back and try to charge him property tax for the additional square footage. I also understand it may not be that difficult to obtain the permits after the fact. Would really appreciate your help, if you have any knowledge in this area. Thank you. A: A little further discussion...My advice is to address the upfront now, otherwise, if and/or when your client goes to sell, they will have to disclose the same issue, and some Buyers won't be comfortable with that. I'm not sure if the city can come after them for higher or past taxes based on the addition, but my guess would be that it's possible but rare. The biggest concern about unpermitted additions is if the city catches wind of the additions (or your client goes to try to have permits pulled now) and they come out and say "We never would have approved this, you need to tear it down". Of course that's not something that happens very often, but that's the biggest concern. Tim, Regarding the "permitted" home addition: (or unpermitted if buyer wants to pull permits) Here is some rough language to consider in your purchase contract, or as part of your BINSR if/when you get to that point. UNPERMITTED LANGUAGE: “Seller agrees to provide permits for additions and/or renovations to the property which were not properly obtained or shown in the public records, and further agrees to process all required paperwork to bring the property into legal compliance.' “Seller to pay any/all permitting fee’s, paperwork fee's, late fee's, late or adjusted assessments and any/all property assessment taxes which may be "due" do to this change.” “These items to be completed to the buyers satisfaction no later than x days prior to COE.” OR
“Seller agrees to provide permits for additions and/or renovations to the property which were not properly obtained or shown in the public records, and further agrees to process all required paperwork to legally change the square footage record in the Maricopa County Tax Assessors Office.” “Seller to pay any/all permitting fee’s, paperwork fee's, late fee's, late or adjusted assessments and any/all property assessment taxes which may be "due" do to this increased square footage.” “Both of these items to be completed to the buyers satisfaction no later than x days prior to COE.” BUILDING PERMITS. Seller agrees to provide permits for additions and/or renovations to the property which were not properly obtained or shown in the public records. Seller's cost to obtain permit(s), including costs to correct deficiencies required to obtain permits, shall not exceed $_________. If costs exceed this amount, Buyer and Seller shall, within five (5) calendar days from the determination of said costs, mutually agree in writing on the amount of the excess that each of the parties shall pay. If the parties fail to reach an agreement, this Sales Contract shall terminate, and all deposits shall be returned to Buyer less all settlement costs chargeable to Buyer.
BUILDING PERMITS - BUYER. Buyer's obligations hereunder are contingent upon the Buyer obtaining a building permit to (write in what permit is for) within ____ (___) calendar days from acceptance of this offer. If Buyer is unable to obtain said permit within the time specified, Buyer shall have the right to terminate this contract by giving written notice to Seller; in such event, all deposits shall be returned to Buyer, less any escrow expenses chargeable to Buyer. BUILDING PERMITS, LACK OF (AS-IS): Buyer is aware that the ___was built without a building permit, does not conform to the tax office records, and may not meet current building codes. Therefore, if the structure is destroyed in the future, Buyer may not be able to rebuild it under the present zoning code. In addition, Buyer is aware that to obtain a permit, the County Building Department may require additional work to be done and/or demolition of the existing improvements. The Seller shall not be required to make any repairs or pay for any expenses with respect to any nonconformance. The Buyer hereby accepts the property in this "as is" condition and releases and agrees to hold harmless, the Seller and the Seller's and Buyer's agents from any and all claims arising from or connected with said nonconformance and lack of building permits.
UNREPRESENTED PARTY: ALSO SEE ARTICLE 26 OF THE AZ CONSTITUTION: Real Estate Licensee cannot draft documents after buyer located: Q: A real estate licensee has a friend who has agreed to buy a home from a FSBO Seller. The friend wants the real estate licensee to draft the purchase contract and other documents for a fee of $300. Can the real estate licensee draft these documents and charge the friend $300? Answer: NO. Under Article 26 of the Arizona Constitution a real estate licensee acting as a broker or agent in the transaction can draft documents incidental to the sale or leasing of real property. The real estate licensee, however, cannot charge for the drafting of these documents.
UNREPRESENTED SELLER OR BUYR: Q: By unrepresented, if I write it up as a convenience to them and supply the other forms they need to sign, that would be representing them, yes? So how do we do it if they have no agent? A: You have them sign the Declination of Real Estate Representation form that is on RSA for you. That document has them acknowledge that you don't represent them. You can provide them with blank copies of the forms to fill out on their own or with another trusted source, but I wouldn't send them completed copies. It would be too easy for them to try to claim that snuck something in the contract that they didn't know about. If they fill it out on their own, they wouldn't have that ability.
UNTRUTHFUL: adjective, saying or consisting of something that is false or incorrect. synonyms: false, untrue, fabricated, made up, invented, trumped up UPDATE SPDS: SEE SPDS, UPDATE UPLOAD CHECK: SEE: VIRTUSMART: CHECK UPLOAD LINK: https://checkupload.virtusmart.com/checks/new/hsaz001 PROPRIETARY HOMESMART TECHNOLOGY. UTILITIES: ALSO SEE FINAL WALKTHROUGH AND WALKTHROUGH AND PRECLOSING WALKTHROUGH AND INSPECTION ACCESS
Section 6m, Seller’s Responsibility Regarding Inspections and Walkthrough(s): Seller shall make the Premises available for all inspections and walkthrough(s) upon reasonable notice by Buyer. Seller shall, at Seller’s expense, have all utilities on, including any propane, until COE to enable Buyer to conduct these inspections and walkthrough(s).
UTILITY EASEMENT: SEE EASEMENT
VACANT LAND, INSPECTION-CONSULTANT: (See disclosusres below by quicksand article): https://compassrealestateinvestments.com/should-i-hire-a-land-development-consultant/ Much, much different than a home inspecton: Planning, zoning land use studies, highest and best, demographic/psychographic studies, pro-forma balance sheets/income statements. Etc, etc.
VACANT LAND PURCHASE CONTRACT: Q: I have not done too many of lot purchases. I will be writing a purchase contract for my client who is buying a residential vacant lot in a rural area in Scottsdale. Will there be a BINSR to fill out in the same manner as we do for a residential property. Should there be a special SPDS for lots that seller needs to provide. What kind of inspection can we do on a lot. A: Print out and review the vacant land purchase contract. The inspection period is 30 unless you change that. There is also a vacant land SPDS and a vacant land BINSR. Your buyer can order any type of inspection they want, survey to mark boundaries, soil tests for drainage, and/or contamination, septic perc test, check city/county records for zoning restrictions, etc etc. SEE SPECIALIZED DISCLOSURES BELOW. Jeff. AGENTS WANT TO HELP THEIR FRIENDS BUY IN PRESCOTT? PINETOP? DO YOU KNOW THE MARKET? WE STRONGLY RECOMMEND SENDING IT OUT AS A REFERRAL-BEYOND YOUR EXPERTISE!
VACANT LAND: SPECIALIZED DISCLOSURES: Recent legislation (A.R.S. 33-423) allows a seller to pay a company to supply a basic disclosure report based on governmental maps on several subjects, including the following; VACANT LAND: Q: Hi. I have a client looking to purchase a lot to build a custome home. Is the process the same as if purchasing a home that is built? Could you walk me through the steps? Thanks! A: We always recommend that if you don't have experience, you should refer it out to someone who does have experience with land. If your client understands land is not your field of expertise, and they choose to move forward with you as their agent regardless, you should have a written agreement acknowledging that. You can find the vacant land purchase contract on zipForms, I encourage you to print that out and spend some time reviewing the different sections, contingencies, etc. Ultimately, the land needs to meet the requirements of whatever it is they want to build, here is a list of some of the variables to consider: Land Transactions, Many Variables: If you don’t have experience with land, we’re going to recommend that you refer it out or get help from someone who does have that experience. Either way, you need to proceed with caution, because With vacant land, there is a possible need for additional due diligence with consideration in many areas such as the following: (This is not an all inclusive list). Military Airports or Facilities Military Training Routes and Restricted Airspace Public or Private Airports Topography Special Flood Hazard Areas Expansive Soils Fissures Radon Gas Potential Zones Superfund Sites Water Wells, Shared Wells, Irrigation, Aquifers Septic Systems Zoning Issues Easements Building Restrictions/NAOS Special Tax Assessment Areas Property Boundary Lines and Surveys Land Leases Physical Access Surrounding Developments Public Report Required Subdivided or Unsubdivided
Additional Forms Required for Vacant Land: 1)Vacant Land/Lot Purchase Contract, 2)Vacant Land SPDS, 3)Vacant Land BINSR, possibly 4) Affidavit of disclosure, possibly 5) Land/Lot Addendum regarding subdivided or unsubdivded land. ALSO: City, County and State governments: ADWR, ADRE public reports, permitting, building, landscaping, survey’s, well drilling, water quality tests, leach fields, septic permits, etc. Additional transaction fee’s may also apply...So again, refer it out or get help from someone who has experience and proceed with caution! VACANT LAND: Q: Hi, Is there such a thing as a land inspector? I’m looking to buy land that was recently split, is there anything I need to put in additional terms and conditions? A: “There are all types of land inspections, surveys, soil, drainage, zoning, etc. We don't have any recommendations, but you could ask for a referral from one of your favorite inspection companies. I would also ask for a copy of the survey from the recent split you refer to in your email. VACANT LAND: RECISSION: https://www.azleg.gov/ars/32/02185-01.htm ARS 32-2185.01(E) 7 Day Right of Recission, also see Vacant Land Purchase Contract Addendum as noted below...
ARS: 32-2185.01. Sale of unimproved lots or parcels; conditions precedent; methods
See item E. Also see VACANT LAND/LOT PURCHASE CONTRACT ADDENDUM REGARDING SUBDIVIDED OR UNSUBDIVIDED LAND: Recission-line #’s 20-26, Subdivider, Subdivided Land, Unsubdivided Land, Unimproved Lot or Parcel– line #’s 16-19.
VACATE: TENATE VACATE LANGUAGE: "Seller agrees to give proper and adequate notice to the tenant so that the property will be vacant at the close of escrow". Q: Can I use the BINSR to ask for evidence of tenants being month to month and make the contract contingent on having that proof? On section 8a of the purchase contract I did note "Seller agrees to give proper and adequate notice to the tenant so that the property will be vacant at the close of escrow". A: No, that wouldn't be the right place to ask for that since the BINSR is used to address repairs. Since you already put that in the pc, you could just send an email or phone call to confirm again that the tenant will vacate prior to COE... VACATION COVERAGE: 1) Add agent to file, or 2) Agent in private remarks section of MLS, or 3) Add agent to vacation schedule (Portal, under my office, vacation tab). That way we'll know who to contact if we need to. SOMEONE TO STEP IN WHEN YOU ARE GONE! VACATION RENTALS, SHORT TERM: SHORT TERM RENTALS DON’T REQUIRE REAL ESTATE LICENSE: CHRIS COMBS, AZ REPUBLIC ARTICLE, AUGUST 9, 2020 https://www.combslawgroup.com/short-term-rentals-dont-require-real-estate-license/ A.R.S. §32-2121(A)(15), VACATION RENTAL/SHORT TERM AZ Legislation Stops Municipalities From Banning Short Term Rentals http://scottsdalerealtors.org/2016/06/01/new-az-legislation-stops-municipalities-from- banning-short-termvacation-rental/ On May 13, 2016, Governor Doug Ducey signed into law SB 1350, which prohibits municipalities from banning the listing and use of short-term rentals. 1 Prior to SB 1350, short-term rentals were essentially “flying under the radar” in most areas of the Valley, including Scottsdale, which prohibited less than 30 day rentals. Despite city ordinances, online services such as AirBnB, VRBO, HomeAway, and others were displaying hundreds to thousands of listings of this type on their sites. The use of these sites not only placed homeowners in violation of the law, but also created an unfair playing field for the hotel industry where they are required to collect and remit additional taxes related to short-term lodging. This piece of legislation takes away the controversy as to whether private property owners are allowed to rent out their home, as they see fit, on a short-term basis. Additionally, now a city, town, or other taxing jurisdiction can more effectively levy and collect a transaction privilege, sales, use or similar tax/fee (in Scottsdale, this is commonly referred to as the “Bed Tax”) in relation to what is considered transient lodging (rentals of less than 30 days). This translates to more revenue for communities, which is a positive outcome of this change. Historically, federal and state laws are designed to protect and defend the rights of property owners to use their property as they see fit. Currently in our area, we see many owners using their primary and vacation homes as a short-term rental to offset their costs. This legislation strikes a balance to allow for more flexibility in the use of one’s home and restores private property rights to owners who wish to take advantage of this type of rental income. What does SB 1350 do?• Prohibits a city, town or county from restricting the use or regulation of vacation rentals and short-term rentals. • Allows the local government to determine regulations governing vacation and short-term rentals if the regulation is meant to protect public health and safety. • Provides a mechanism to collect rental taxes and remit to the Arizona Department of Revenue. • Creates more economic opportunity and inclusiveness, while protecting the private property rights of the homeowner. What does SB 1350 NOT do?• Prohibit Homeowner Association’s (HOAs) from banning the practice of vacation rentals and short-term rentals within their community. What does this actually mean for homeowners living within an HOA? It means, if an HOA’s CC&R’s prohibit or restrict the rental of a member or unit owner’s property, then the property may not be rented without complying with the restrictions. If the CC&R’s currently do not restrict the rental of property and the HOA seeks to amend its CC&R’s to include such provisions, they may do so, but it will require a statutorily higher vote count of the unit owners hey what is our policy for our agent to rent their properties out on VROB or AIR BNB? JR Anything under 2 weeks they can keep outside the brokerage, plus disclose REALTOR status. Over that and we need a regular rental file...KF NEW AS OF 9/2019: No file required. SHORT TERM RENTALS: airbnb 9/19: Per Laurie, no file required. The vendor is acting as the paid property manager, vendor manages the entire process, RE License not required, ARLTA does not apply, vendor handles all payments, fees, complaints, bookings, etc through their private, propriety website.
VACATION RENTAL TAX RATE: The tax rate for real property rentals is 1.75% of taxable rental income. A person who has three or more residential units rented or available for rent in the State of Arizona must pay tax to the City of Scottsdale on the units located within the City of Scottsdale. real property rentals - City of Scottsdale https://www.scottsdaleaz.gov/Asset10022.aspx Vacation Rentals & Short Term Rentals: City of Scottsdale, MAPS, RULES & REGULATIONS, FAQ’S, ETC. https://www.scottsdaleaz.gov/codes/vacation-short-term-rentals https://www.azcentral.com/story/news/local/peoria/2018/12/04/conflict-sun-city-retirement-homes-become-rentals-young/2094900002/?fbclid=IwAR2lgacIikMS6N6KXK2L8qgDTYqALAnAUo1snsJi9zvSv7AokKDGrlaZ0RM Sun City worries that Airbnb renters are too young VACATION RENTALS: CLICK HERE: HOAs can prohibit VRBO/Airbnb short-term rentals: By Christopher Combs | September 29, 2019 Many CC&Rs have a non-waiver clause that states that, even if a specific CC&R has not been enforced in the past, future enforcement of that specific CC&R will be allowed. Therefore, even if there has been a frequent violation of a specific CC&R such as no short-term rentals, but there is a non-waiver clause in your CC&Rs, that CC&R can still be enforced against the current and future violations. SHORT TERM RENTALS: HOW CONVERT TO AIRBNB? Conversion of Three Rental Homes to Short-Term Rentals; By Christopher Combs | February 9, 2020 Combs Law Group
Note: Although there is a recent Arizona law against cities and towns by public regulation prohibiting short-term rentals, there is no Arizona law against HOAs, by private regulation in CC&Rs, prohibiting short-term rentals. ARTICLE: CC&Rs Can Prohibit Vacation Rentals By Christopher Combs | February 4, 2018
VACATION RENTALS: WHERE CAN I FIND MORE INFORMATION? Q: Where is the best place to find current Phoenix and Scottsdale rules and/ regulations on using a property and a rental? I know HOA's will have their own rules. Thank you!! A: You should look directly to the city where the property is located. Start with their website, you will typically find most of the information you are looking for online. Or, you can also call them with more specific questions. State and local laws regarding rentals, specifically short term rentals have recently changed. My understanding is that to be approved for a short term rental, Owners must now apply for and receive a sales tax license along with other additional requirements. Reach out to the city in question for additional information and to find out what their specific requirements are. Hope that helps.
VACATION RENTALS, SHORT TERM RENTALS CONTINUE TO CAUSE CONFUSION, Arizona Republic Article, June 14, 2020: Chris combs, click HERE VACATION RENTALS, SIMPLE DEED RESTRICTIONS BETWEEN NEIGHBORS CAN PROHIBIT SHORT TERM RENTSLS, April 5, 2020, Chris Combs, click HERE
VALID CHECK: I'm sure by now many of you have either heard about or have received a Valid Check. This exciting new, innovative, proprietary technology, was developed by HomeSmart to get you paid quickly!!! This process allows us to send your commission check via email, eliminating the need to drive to an office to pick up your check. The email will come from ValidCheck with the subject "Your Check is Ready." Upon receipt of the email, just click the link, print the check using a standard printer, and deposit into your credit union or bank like normal. Below is an example of the email for your reference.
Also, we can now receive rental and referral checks electronically through our very own Check Upload process. You can click here to copy/paste this link in the body of your email to any landlord, tenant, or brokerage. They can simply visit the shared link on their mobile device and upload the check. Closing immediately receives an email indicating the check is available, allowing us to then close our the file and get you paid. No more waiting on the post office!!! If you have any questions or concerns, please contact the Closing Department at 602.889.2125 or commission@homesmart.com. |
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Yes, there is quicksand in Arizona! February 19, 2019 |
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Also see indemnification form in RSA. |