Arizona Real Estate Transaction Issues

An Arizona real estate transaction

… is “closed” by the recording of the deed at the appropriate county recorder’s office. This is done by the escrow company when all aspects of the Purchase Contract have been satisfied.

Good News:  an Arizona real estate transaction is very simple compared to most eastern states.

Bad News:  an Arizona real estate transaction may be too simple, enticing owners to FSBO (for sale by owner) where they are likely not competent to do so. It’s a legal process involving a very high-value asset, and mistakes are usually not reversible.

See Contents – Pages and Important Posts for the full list of important Arizona Real Estate issues.

The following concepts are also important, but don’t require a full page.

County Assessor Records

County assessor records include the assessed value of the property for tax purposes, plus other information about the property. Please note: the livable square footage reported here is NOT necessarily accurate.

More information: Maricopa County Assessor


is a form of ownership … that can be applied to any type of structure … from a single-family-detached home to a unit in a 40-story high-rise. This is true in any state, not just Arizona.

Technically, a condo owner owns the air space within a specific unit and a proportional share of all physical elements of the entire property, and usually has the responsibility to maintain any systems and equipment that apply only to the owner’s unit, such as the AC condenser on the exterior somewhere.

Previously in metro Phoenix, most condos involved townhouses, patio homes, detached homes, or a mix of two or more of these structures. Until recently, there were relatively few apartment-style condos. That is changing – many apartments are being “converted” to condominium ownership, plus more high-rise residential structures are being initially built for condo ownership.

Covenants, Conditions and Restrictions – CC&Rs

… are created by the land/subdivision developer, recorded against each parcel in the development and provided to buyer prospects prior to the initial purchase. These ‘rules of the road’ are an integral part of the real estate and apply to the initial and any subsequent owners, and the HOA if there is one. The purpose is to provide the homeowner’s association with a means to control certain aspects of all property within the development and thereby enhance both the value and the enjoyment of all of the properties. Every property owner is bound by the CC&Rs. The CC&R’s and HOA By Laws spell out how changes can be made to these controlling documents, but usually change requires an overwhelming vote of approval by the owners. A buyer should consult legal counsel if necessary to have a clear understanding of the CC&Rs.

Note – CC&R’s can exist and apply for a property even though there is no HOA.

More information: CC&Rs –

Homeowner Association – HOA

… will almost always exist where there are living units with common walls because where there are common walls there will also be common property elements. A HOA exists for most subdivisions built since about 1985 for one or both of two reasons: (1) there are common property elements to most subdivisions – such as green belts, parks, community pools, etc.; and/or (2) developers create a HOA for the subdivision so owners may exert architectural control in the future – such as over the paint color of a house. In the case of a condominium, the entire property outside the individual unit living space is a “common property element”.

A HOA consists of all property owners in the development, plus the developer until all units/lots are sold. Owners elect a Board of Directors, who normally must be owners. This Board then manages the HOA according to the rules specified by the HOA Bylaws, CC&Rs, architectural control standards, and/or landscape control standards created by the developer.

HOAs have been the focus of much scrutiny by the Arizona legislature over the last few years.

More information: Arizona Homeowner Associations

Inspection – Physical.

The importance of a professional home inspection during the escrow process cannot be over-emphasized. A home inspection is an examination, primarily visual, of the property. The purpose is to identify material defects in the property. The inspector provides the buyer with a written report about the home’s condition. Home inspectors and inspection companies are regulated by the State of Arizona.

More information: Professional Inspections     ASHI – Assn of Home Inspectors

Inspection – Termites and Other Wood Destroying Organisms.

Termites are common in this part of Arizona, but generally inflict little significant damage, especially if detected reasonably early. These inspections are not mandatory, except that lenders usually require a clean/clearance report as a condition to making the loan. The Structural Pest Control Commission (“SPCC”) regulates termite inspectors, gets a report of every termite inspection, and can provide the buyer with information regarding past termite treatments on a property.

Lead-Based Paint Disclosure

Lead-based paint is a serious health hazard, especially for very small children who might eat it. On any property built prior to 1978, the seller must provide the buyer with a lead-based paint disclosure form.

MLS Detail Report

A critical point – a MLS report is an advertisement … it is NOT part of the purchase contract.

All MLS information must be verified by the buyer. The List Agent must not misrepresent a property, but his/her information can be incorrect and/or incomplete.

The purchase contract must be totally comprehensive for the intent and expectations of the buyer. The contract must specify, for example, what personal property is to be included with the real estate – such as a refrigerator, washer, or dryer – even though the MLS printout may specifically indicate such items are included. If it’s not in the contract, it is not necessarily included, no matter what is stated in the MLS report.

Public Report.

For a new home subdivision, developers are required to create a ‘Public Report’ that specifies many important facts about the property and subdivision, give a copy to prospective buyers, and have the buyer sign an acknowledgement of delivery. The topics covered in the Public Report are specified by the State of Arizona. The purpose is to disclose facts about the property that might influence a buyer’s purchase decision.

More information: Arizona Department of Real Estate – Checklist

Title Insurance, Title Report, and Title Commitment.

Title insurance protects the beneficiary from financial loss for the property purchase issues specified in the policy. There is more than one level of protection – the more protection, the higher the cost.

A title report is assembled while the transaction is in escrow, and delivered to both buyer and seller.

Schedule B of the report lists insurance exceptions/exclusions, which could include encumbrances, easements, and liens against the property, some of which may affect the use of the property. Don’t hesitate to ask the title/escrow officer any questions regarding Schedule B items.

The ‘commitment’, which is usually part of the title report, specifies what must be done before the title insurance company will issue a title insurance policy. The most common items here are payoff the loans and liens specified in the Schedule B.

If you have an escrow or title question, you can also contact the Land Title Association at 602-631-3818.

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Other Arizona Real Estate Issues

* Agency - What is it?
* Buyer's Agent - Guardian Angel
* Listing Agent's Job
* Broker - Agent Difference?
* AZ RE Transaction Issues
* Buyer Advisory - Priceless - FREE
* Escrow - What is it?
* SPDS - Seller Disclosure
* BINSR - Buyer Inspection Notice
* Arizona Dept of Real Estate

* Contents

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