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Misrepresentations and Failure To Disclose in Real Estate

Posted on March 10, 2023 in

If you are buying or selling property in Arizona, you should be aware of the legal obligations and ethical considerations real estate agents and brokers must follow. By failing to disclose important information or misrepresenting aspects of the property, substantial financial harm could be done to all involved parties. 

Arizona Real Estate Law and Misrepresentations

Misrepresentations occur when a report or action is inaccurate and untruthful. In Arizona real estate law, these may include the following: 

  • Misleading advertising is a misrepresentation. Real estate agents are required to fact-check their advertising to ensure it is truthful and not misleading. These are statements regarding the property that must be a genuine concern about the property’s condition, the price, where it is located, and the amenities on the property.
  • Hiding defects that could affect how safe or how valuable the property is is a misrepresentation of the property. This includes issues like structural damage, termites, water damage, etc. 
  • Exaggerating is a way that a property’s features can be misrepresented. This could be the case when the size of the property is exaggerated, or there are promises of improvements that may or may not happen. 
  • Failing to disclose all the facts, especially negative ones, so that the buyer is not able to make an informed decision about the property. This may include building and zoning restrictions, upcoming rezoning that could negatively impact the property, environmental hazards, dangerous materials, or noise pollution.

When misrepresenting property in real estate transactions, expect there to be serious penalties in Arizona. In the state of Arizona, buyers may sue the seller, agent, or broker who misrepresented the property and caused them to spend more than expected on repairs, diminished property value, or emotional anguish from the transaction. 

Arizona has laws in place to protect buyers from intentional misrepresentations, fraud, and other types of false pretenses. 

Failure to Disclose in Arizona

Arizona real estate brokers are tasked with disclosing certain information to prospective buyers. Disclosures they are responsible for alerting the buyer about are listed below:

  • Material defects: Agents have a responsibility to disclose any and all material defects that could diminish the property’s value or safety to the potential buyer. These defects might include things like leaks, structural damage, or problems with the foundation. 
  • Environmental hazards: Agents are required to inform potential buyers of environmental hazards on or close to the property. These could be things like lead-based paint, asbestos, mold, or hazardous waste.
  • Previous repairs or renovations: The agent is required to disclose repairs and renovations that have been made to the property, along with proof of inspections that were required or permits that were needed.
  • Zoning restrictions: The agent has a responsibility to disclose any other factors that might influence the buyer’s decision. Things like zoning restrictions should be disclosed prior to purchase.

Types of Misrepresentation Lawsuits

There are three ways that misrepresentations occur, according to Arizona law. Listed below are the types of misrepresentation lawsuits that might be filed: 

  • Innocent misrepresentation: This type of misrepresentation means that the mistakes were simple and made without intent, with little harm done. 
  • Negligent: This type of misrepresentation means that there were significant issues with the property that the buyer was not informed about due to ignorance on the part of the seller, agent, or broker.
  • Fraudulent: Fraudulent misrepresentation is done when the potential buyer is deliberately misled about the property issues in order to make the sale. 

To be successful in a misrepresentation lawsuit, important material facts about the property must have been withheld. These facts have to be the type that would be off-putting enough to a reasonable person that they would not choose to purchase the property.

Penalties and Consequences for Failing to Disclose in Arizona

In Arizona, failure to disclose information carries with it severe penalties. Buyers who find out they have bought a property with undisclosed defects or hazards have the right to sue the seller, the agent, or the broker for the damages it has cost them. In addition to facing a lawsuit, the Arizona Department of Real Estate or the Arizona Association of Realtors may take disciplinary action. 

Suppose you are considering buying or selling a home in Arizona or have had issues with a real estate agent, broker, or seller. In that case, contacting an Arizona real estate attorney with Stewart Law Group is in your best interest. The Stewart Law Group team understands the intricacies of real estate law and is ready to guide you through the legal process.