When purchasing a home in Arizona, one of the most valuable documents you’ll receive is the Seller’s Property Disclosure Statement, commonly known as the SPDS (pronounced “spuds”). This detailed disclosure form provides crucial information about the property’s condition, history, and potential issues as reported by the seller. While it might look like just another form in a stack of paperwork, the SPDS can reveal vital information that could influence your decision to purchase a property or affect your negotiating position.
This comprehensive guide will walk you through the Arizona SPDS, explaining what it covers, why it matters, and how to use this information effectively during your home-buying process.
The Arizona Association of REALTORS® Seller’s Property Disclosure Statement is a standardized form that sellers complete to disclose known information about their property. The document asks sellers to answer a series of detailed questions about various aspects of the property, its condition, and its history.
The purpose of the SPDS is straightforward but crucial: to provide buyers with information about material facts that might affect their decision to purchase the property or the price they’re willing to pay. By documenting the seller’s knowledge about the property, the SPDS helps create transparency in the transaction and potentially reduces the risk of future disputes.
In Arizona, sellers have a legal obligation to disclose known material facts about their property, regardless of whether they complete a formal SPDS. This obligation stems from case law, particularly the landmark Arizona case Hill v. Jones (1986), which established that sellers must disclose known material defects that aren’t readily observable to buyers.
The SPDS doesn’t create this disclosure obligation—it simply provides a standardized format for fulfilling it. Even if a transaction proceeds without an SPDS (which is rare but possible), the seller still must disclose material defects.
It’s important to understand that the disclosure obligation extends only to information the seller actually knows. Sellers aren’t required to hire inspectors to discover problems they’re unaware of, nor are they expected to disclose issues they genuinely don’t know about.
According to the standard Arizona Residential Resale Real Estate Purchase Contract, the seller must deliver the completed SPDS to the buyer within three days after contract acceptance. Upon receipt, you’ll typically have the inspection period (usually 10 days) or five days after receiving the SPDS (whichever is later) to review it and respond.
If you discover concerning information in the SPDS, you generally have three options:
This timeline makes it crucial to review the SPDS promptly and thoroughly once you receive it.
The SPDS is comprehensive, covering nearly every aspect of the property’s condition and history. Let’s examine the major sections and what each reveals:
This initial section identifies the property address and asks about:
Why it matters: A seller who has never occupied the property or hasn’t lived there recently may have limited knowledge about its condition. Similarly, rental property may have experienced more wear and tear than owner-occupied homes.
This extensive section covers the property’s structural components and systems, including:
Why it matters: This section provides critical information about the age and type of major systems. For example, if the roof is 15 years old and the typical lifespan for that roof type is 20 years, you can anticipate replacement costs in the near future. Similarly, information about safety features helps you understand potential upgrade needs to meet current standards.
This section details:
Why it matters: Alternative water or sewer systems often require ongoing maintenance and have different costs compared to municipal services. Wells may have water quality or quantity issues, while septic systems require periodic maintenance and potential replacement.
This crucial section addresses potential environmental hazards, including:
Why it matters: Environmental issues can pose health risks, require expensive remediation, or affect quality of life. For instance, previous water damage might indicate potential mold problems even if no mold is currently visible. Soil settlement issues could signal foundation problems that are extremely costly to repair.
This section provides detailed information about septic systems or alternative wastewater treatment facilities if the property isn’t connected to municipal sewer.
Why it matters: Septic systems require periodic inspection, maintenance, and eventual replacement. Understanding the system’s age, condition, and maintenance history helps anticipate potential costs. Additionally, Arizona law requires inspection of these systems before property transfer in many cases.
This section asks about:
Why it matters: Roof repairs or replacement can be among the most significant expenses a homeowner faces. Documented issues with the roof or exterior components might indicate the need for further inspection or negotiation regarding repairs.
Detailed questions about:
Why it matters: Plumbing issues can range from minor nuisances to major expenses. Water pressure problems might indicate municipal supply issues or internal plumbing problems. Recurring leaks might suggest systemic issues with the plumbing system.
This section covers:
Why it matters: HVAC systems are essential for comfort in Arizona’s climate and represent significant replacement costs. An aging system nearing the end of its expected lifespan might necessitate budgeting for replacement soon after purchase.
Questions about:
Why it matters: Electrical issues can range from inconvenient to dangerous. Outdated electrical systems might require updating to meet modern demands or safety codes. Information about leased equipment (like solar panels) is crucial as these lease agreements typically transfer to the new owner.
This catch-all section asks about:
Why it matters: This section often reveals crucial information about past problems, unpermitted work that might not meet code requirements, or ongoing disputes that could affect property value or enjoyment. HOA information helps buyers understand community rules and potential restrictions.
This section provides space for the seller to elaborate on any “yes” answers throughout the form, providing details about issues, repairs, or other relevant information.
Why it matters: The explanations often contain the most valuable information in the entire SPDS. For example, a simple “yes” to past water damage becomes much more meaningful when the seller explains, “Minor roof leak in 2019 over master bedroom was repaired and drywall replaced. No further issues since repair.”
The SPDS provides valuable information, but knowing how to use it effectively can make a significant difference in your home-buying experience:
Review the entire document carefully as soon as you receive it. Don’t just skim for “yes” answers—even “no” responses provide valuable information about what the seller claims isn’t an issue.
A single issue might not be concerning, but multiple related issues could indicate a pattern of problems. For example, several plumbing repairs in different areas might suggest systemic issues with the plumbing system.
Use the SPDS as a companion document to your home inspection report. If the inspector finds issues not disclosed in the SPDS, this might indicate either:
Either way, such discrepancies warrant further investigation.
The additional information provided in the explanation section often contains the most valuable details. Pay particular attention to:
Don’t hesitate to request clarification or additional information about concerning disclosures. Your real estate agent can help formulate these questions and communicate them to the seller.
If the SPDS reveals significant issues in a particular area (roof, foundation, electrical, etc.), consider hiring a specialist to evaluate that specific system rather than relying solely on a general home inspector.
While reviewing an SPDS, be particularly alert to these potential warning signs:
Generic responses without specific details might indicate an attempt to technically disclose an issue while minimizing its significance. For example: “Some water entry during heavy rains” is far less informative than “Basement floods during monsoon season, typically 1-2 inches of standing water.”
Information that doesn’t align with other statements or observations should prompt further investigation. For instance, if the seller claims a roof is five years old but visible wear suggests greater age, further verification is warranted.
While sellers genuinely may not know certain information (especially if they’ve never occupied the property), an SPDS with numerous “unknown” answers provides less protection and information than one with definitive responses.
Recently addressed significant issues could indicate either conscientious maintenance or an attempt to temporarily fix chronic problems before selling. Ask for documentation of repairs and the issues that prompted them.
Multiple insurance claims, especially for the same issue, might suggest recurring problems or potentially higher insurance rates for the property.
Additions, renovations, or conversions completed without proper permits may not meet building codes and could require expensive corrections in the future.
Disclosures about neighborhood nuisances, disputes, or problems can affect your enjoyment of the property and potentially its resale value.
The SPDS is the seller’s statement about what they know regarding the property. But what happens when sellers fail to disclose known issues?
In Arizona, sellers who knowingly withhold material information about the property may be liable for:
Potential remedies for buyers who discover undisclosed issues after purchase include:
However, these cases can be difficult to prove, as the buyer must typically demonstrate that the seller knew about the problem and intentionally concealed it. Documentation from inspections, repair records, neighbor testimony, or the seller’s own statements can be crucial evidence in such cases.
While valuable, the SPDS has important limitations buyers should understand:
The SPDS reports only what the seller claims to know. It doesn’t guarantee that all issues have been identified or disclosed.
Sellers complete the SPDS based on their personal knowledge without any requirement for professional verification of their statements.
Some questions involve subjective assessments. What one seller considers a “minor” issue, another might consider significant.
The SPDS complements but doesn’t replace professional inspections. Even the most thoroughly completed SPDS might miss issues that trained inspectors would identify.
The SPDS isn’t a guarantee or warranty about the property’s condition. It’s simply a disclosure of what the seller claims to know at the time of completion.
Some buyers mistakenly believe that purchasing a property “as-is” means the seller has no disclosure obligations. However, the seller’s legal duty to disclose known material defects exists regardless of whether the property is sold “as-is.”
An “as-is” clause generally means the seller won’t make repairs or provide credits for discovered issues, but it doesn’t relieve the seller of their disclosure obligations. Even with an as-is sale, the buyer still has the right to know what they’re purchasing, including known defects.
The standard SPDS form works well for typical single-family homes, but special situations may present unique disclosure considerations:
Investors who haven’t occupied properties may have limited knowledge about their condition. While this might result in more “unknown” responses, it doesn’t eliminate the disclosure obligation for issues the investor does know about.
Representatives selling properties for deceased owners face challenges in completing the SPDS, as their knowledge may be limited. However, they must still disclose any material issues they’re aware of.
New homes typically don’t use the standard SPDS form, but builders still have disclosure obligations regarding construction issues, soil conditions, or other material facts. Many builders use their own disclosure forms.
Financial institutions selling foreclosed properties often provide limited disclosures and may use alternative forms rather than the standard SPDS. These transactions typically place greater responsibility on buyers to investigate the property’s condition.
To illustrate how the SPDS functions in practice, consider these real-world scenarios:
Situation: A seller marks “No” for any roof leaks or damage on the SPDS. After closing, during the first monsoon season, you discover significant water intrusion through the ceiling. Further investigation reveals water stains that had been freshly painted over and neighbors confirm the previous owner had complained about roof leaks.
Potential Outcome: This situation might support a claim for fraudulent misrepresentation, as evidence suggests the seller knew about and deliberately concealed the issue. You might be entitled to damages covering the cost of roof repairs and interior damage.
Situation: A seller honestly answers “No” to questions about plumbing problems because they’ve never experienced any issues. After purchase, you discover significant corrosion in pipes inside the walls that eventually leads to a major leak and water damage.
Potential Outcome: If the seller truly had no knowledge of the problem and it wasn’t reasonably discoverable during their ownership, they likely fulfilled their disclosure obligation despite the existence of the issue. This highlights the importance of thorough inspections, including specialized plumbing inspections for older homes.
Situation: The SPDS indicates “some settling” in the explanation section for a “Yes” answer about soil problems. After purchase, you discover significant foundational issues requiring $30,000 in repairs. Evidence suggests the seller had received a professional evaluation revealing the severity of the problem.
Potential Outcome: This could constitute negligent misrepresentation or fraudulent concealment if the seller deliberately downplayed a known serious issue. The vague disclosure might technically mention the problem but fails to convey its true extent and significance.
To maximize the value of the SPDS and protect yourself during the purchase process:
Ask to see the SPDS before making an offer if possible. While sellers aren’t obligated to provide it before accepting an offer, some will do so upon request, allowing you to factor disclosed issues into your initial offer.
Keep records of all communications about property conditions, inspection reports, and the SPDS itself. This documentation could prove valuable if undisclosed issues arise after purchase.
Hire qualified, experienced inspectors to thoroughly evaluate the property, paying special attention to any areas where the SPDS indicates past issues or repairs.
Don’t hesitate to request more information, documentation of repairs, or specialized inspections for disclosed issues. Your inspection period is your opportunity to fully investigate the property’s condition.
If significant issues are disclosed, consult appropriate professionals—contractors, engineers, environmental specialists—to evaluate the scope and potential cost of addressing these concerns.
Use information from the SPDS to inform your negotiation strategy, whether requesting repairs, price adjustments, or credits at closing to address disclosed issues.
The Seller’s Property Disclosure Statement represents one of your most valuable tools as an Arizona homebuyer. When properly completed, it provides insights into the property’s history, condition, and potential issues that might not be immediately apparent during viewings or even standard inspections.
Remember that the SPDS reflects the seller’s knowledge at a specific point in time—it’s not a guarantee or warranty about the property’s condition. Used in conjunction with thorough inspections and due diligence, however, it helps create transparency in the transaction and reduces the likelihood of unpleasant surprises after purchase.
By understanding what the SPDS covers, how to interpret the information it contains, and its limitations, you can make more informed decisions during your home-buying process. This knowledge empowers you to ask the right questions, investigate concerning disclosures, and ultimately gain greater confidence in what might be the largest purchase of your life.