Regarding your seller’s disclosure agreement, The general rule of thumb is “when in doubt, disclose.” This will protect both you and the buyer and be instrumental in avoiding future lawsuits. There are; however, a few very specific cases when disclosure is not required and sometimes seen as discriminatory. Material facts that do not need to be disclosed are very limited and licensees and transferors of property are protected by statutory law in these few circumstances.
The Stigmatized Property Law (A.R.S. 32-2156) reads as follows:
“No criminal, civil, or administrative action may be brought against a transferor or lessor of real property or a licensee for failing to disclose that the property being transferred or leased is or has been:
1. The site of a natural death, suicide, or homicide, or any other crime classified as a felony
2. Owned or occupied by a person exposed to the human immunodeficiency virus, or diagnosed as having the acquired immune deficiency syndrome, or any other disease that is not known to be transmitted through common occupancy of real estate
3. Located in the vicinity of a sex offender
Failing to disclose any fact or suspicion as set forth in subsection A shall not be grounds for termination or rescission of any transaction in which real property has been or will be transferred or leased.”
This disclosure agreement law has been interpreted by legal counsel to indicate that there is no obligation to disclose that:
• A natural death, suicide, homicide, or felony occurred on the property
• It was inhabited or owned by a person with HIV or AIDS or any other disease that cannot be transmitted by living in the same property
• A sex offender lives in the area
In the case of HIV, AIDS, or other disease, it is highly recommended that a transferor of property and the licensee not disclose this, due to the risk of being seen as discriminatory against a protected class.
However, this law does not address every possible scenario and will most likely be tested at some point in a lawsuit. In theory, since this law includes “any felony,” would it protect a seller or licensee from not disclosing that the property had been a meth lab? Well, perhaps not.