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Property Disclosure Statement Guide: What Landlords, Tenants, and Investors Need to Know

Learn everything about property disclosure statements, including legal requirements for sellers, what tenants should know when their rental is being sold, and how investors can protect themselves during transactions.

Introduction

A Property Disclosure Statement is a legally significant document that requires property sellers to reveal known material defects and issues with a property. Whether you're a tenant whose rental home is being sold, a landlord selling your rental property, or a real estate investor managing multiple properties, understanding disclosure requirements is crucial to protect your interests and avoid potential legal disputes. This guide explains what property disclosure statements entail, who needs to complete them, what must be disclosed, and how these documents affect different parties in real estate transactions.

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Key Things to Know

  1. 1

    Property disclosure requirements vary by state, so always check your local laws or consult with a real estate attorney to understand specific obligations in your area.

  2. 2

    Disclosure statements typically cover known issues only—sellers generally aren't required to hire inspectors to discover unknown problems.

  3. 3

    For landlords selling rental properties, tenant-reported maintenance issues should be included in your disclosures, even if you haven't personally verified them.

  4. 4

    Tenants' lease rights are generally protected when a rental property is sold; the new owner typically must honor existing lease terms.

  5. 5

    Real estate investors should maintain detailed property records and consider pre-listing inspections to facilitate accurate disclosures.

  6. 6

    Selling a property 'as-is' does not exempt sellers from disclosure requirements—you must still disclose known material defects.

  7. 7

    The consequences of inadequate disclosure can include lawsuits, monetary damages, rescission of the sale, and significant legal expenses.

  8. 8

    When in doubt about whether to disclose something, the safer legal approach is to include it in your disclosure statement.

Key decisions before you file

Before you file a Property Disclosure Statement in Arizona, a few decisions shape the document: which option to choose and what each one means. The Property Disclosure Statement guide walks through them.

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Arizona Requirements for Property Disclosure Statement

  • Seller Disclosure Statement Requirement (A.R.S. § 33-422)

    Arizona law requires sellers to disclose all known material facts about the property that might affect its value. This includes completing the Arizona Association of Realtors' Residential Seller's Property Disclosure Statement (SPDS) or equivalent document.

  • Material Fact Disclosure (Hill v. Jones, 151 Ariz. 81, 725 P.2d 1115 (App. 1986))

    Sellers must disclose all known material facts that might affect the value or desirability of the property, including defects not readily observable by the buyer.

  • Lead-Based Paint Disclosure (42 U.S.C. § 4852d; 40 CFR Part 745)

    For properties built before 1978, sellers must disclose known lead-based paint hazards, provide buyers with an EPA-approved information pamphlet, and allow buyers a 10-day period to conduct a lead-based paint inspection.

  • Water Damage and Mold Disclosure (A.R.S. § 33-422)

    Sellers must disclose any past or present water damage, water intrusion, or mold issues affecting the property.

  • Structural Defects Disclosure (A.R.S. § 33-422)

    Sellers must disclose known structural defects including foundation issues, roof problems, wall cracks, or other structural integrity concerns.

  • HVAC System Disclosure (A.R.S. § 33-422)

    Sellers must disclose the age, condition, and any known defects in the heating, ventilation, and air conditioning systems.

  • Plumbing and Electrical System Disclosure (A.R.S. § 33-422)

    Sellers must disclose known defects or issues with the property's plumbing and electrical systems, including any non-permitted work.

  • Flood Zone Disclosure (A.R.S. § 33-422)

    Sellers must disclose if the property is located in a FEMA-designated flood zone or has experienced previous flooding.

  • HOA Disclosure (A.R.S. § 33-1806)

    Sellers must disclose if the property is subject to a homeowners association (HOA), including providing CC&Rs, bylaws, and financial information about the association.

  • Environmental Hazards Disclosure (A.R.S. § 33-422)

    Sellers must disclose known environmental hazards on the property, including asbestos, radon, underground storage tanks, or toxic substances.

  • Sewer/Septic System Disclosure (A.R.S. § 33-422)

    Sellers must disclose the type of sewage disposal system (municipal sewer or septic tank) and any known issues with the system.

  • Water Source Disclosure (A.R.S. § 33-422)

    Sellers must disclose the property's water source (municipal, well, hauled water) and any known issues with water quality or availability.

  • Pest Infestation Disclosure (A.R.S. § 33-422)

    Sellers must disclose any known past or present pest infestations, including termites, scorpions, or other pests common to Arizona.

  • Boundary Dispute Disclosure (A.R.S. § 33-422)

    Sellers must disclose any known boundary disputes, encroachments, or easement issues affecting the property.

  • Death on Property Disclosure (A.R.S. § 32-2156)

    Arizona law does not specifically require disclosure of deaths on the property unless they relate to the physical condition of the property or are considered a material fact that might affect value.

  • Airport Vicinity Disclosure (A.R.S. § 28-8484)

    Sellers must disclose if the property is located within the vicinity of a military or public airport as defined by Arizona law.

  • Swimming Pool Safety Disclosure (A.R.S. § 36-1681)

    Sellers must disclose information about swimming pool barriers and safety features as required by Arizona law.

  • Methamphetamine Contamination Disclosure (A.R.S. § 33-422)

    Sellers must disclose known methamphetamine production on the property, as this constitutes a material fact affecting property value.

  • Expansive Soil Disclosure (A.R.S. § 33-422)

    Sellers must disclose known issues with expansive soils or other soil problems that could affect the property's foundation or structure.

  • Seller's Liability for Misrepresentation (A.R.S. § 33-422; Common Law)

    Sellers can be held liable for fraudulent misrepresentation, negligent misrepresentation, or failure to disclose material facts about the property.

Frequently Asked Questions