Duty To Disclose Defects In Arizona Real Property Transactions

The seller of real property must disclose to the buyer any fact concerning the property that materially affects the value of the property. In determining whether a matter is material, Arizona courts have indicated that a matter is material if it is one to which a reasonable person would attach importance in purchasing the property in question.

Most defects in a home are considered to be “latent” defects. So what is a latent defect? A latent defect is defined as “[a] hidden or concealed defect. One which would not be discovered by reasonable and customary observation or inspection…” Black’s Law Dictionary 611 (Abridged 6th ed. 1991).

Anyone selling real property in Arizona must provide the buyer with a Seller Property Disclosure Statement (“SPDS”). Any latent defects that are material must be disclosed by the seller in the SPDS. Where a seller of real property knows of facts materially affecting the value of the property that are not readily observable and are not known to the buyer, the seller is under a duty to disclose those facts to the buyer. Hill v. Jones, 151 Ariz. 81, 725 P.2d 1115 (App. 1986).