Real Estate Tips | Andrew Robb RE/MAX Fine Properties

Real Estate Cure Period

July 7, 2018 By Andrew Robb

If one party is in breach of the real estate purchase contract, the other party must issue a cure notice and allow the breaching party 3 days to correct the breach. The day after the cure notice is delivered is counted as day 1. Days are calendar days, with weekends and holidays also counting as days. If the purchase contract breach has not been corrected during the 3-day cure period, then the non-breaching party may cancel the contract and/or proceed against the breaching party in any claim or remedy that the non-breaching party may have in law. Any purchase contract breach requires a cure period be issued before any cancellation by non-breaching party or compensation to non-breaching party (such as forfeiture of earnest deposit by breaching party).

The Cure Period Notice is a document used to issue a cure notice regarding non-compliance of the purchase contract. The non-breaching party should complete the form, clearly describing the breach, sign the form and deliver to breaching party. This meets the terms of the purchase contract, which requires a written notice of breach and allows for a 3-day cure period. Written notice must be provided for the 3-day cure period to begin. If no written notice is given by non-breaching party then there is no consequence to the breach.

Is email considered a form of issuing a cure period notice? No. For proper constructive notice, compliant party must deliver to non-compliant party the completed and signed Cure Period Notice form, plus it is a very good idea to also copy the title/escrow company at the same time (to serve as proof of issuance).

AZ Purchase Contract Timeline

June 20, 2018 By Andrew Robb

Here is how a typical 35-day purchase contract closing timeline may look for buying a home in Phoenix, AZ:

Day 0 – offer accepted so all contract timelines begin next day
Day 1 – start of buyer inspection period (usually 10 calendar days) to perform verification of all things important
Day 3 – receive SPDS (Seller Property Disclosure Statement) and CLUE (Comperhensive Loss Underwriting Exchange – insurance loss history experience) from seller (on or before this day)
Day 10 – deliver BINSR (Buyer Inspection Notice Seller Response) to seller (on or before this day) plus receive LSU (Loan Status Update) from lender (on or before this day)
Day 15 – receive BINSR seller response (on or before this day)
Day 20 – buyer decisions BINSR (on or before this day)
Day 21 – lender orders appraisal after BINSR is decisioned
Day 28 – receive appraisal (usually within a week from ordering)
Day 29 – buyer loan file submitted to lender underwriting
Day 31 – lender underwriting issues loan approval and loan documents ordered
Day 31 – evidence of any seller repairs must be provided (on or before this day)
Day 32 – title/escrow company receives buyer loan documents and finalizes closing statement
Day 33 – buyer and seller sign separately at title/escrow company
Day 34 – buyer performs final walkthrough at property and checks on any seller repairs
Day 35 – lender wires loan funds to title who sends file for recording at county
Day 35 – buyer obtains keys after confirmation of recording has been received

Of course, this is for a smooth closing without issues (say an appraisal shortfall which requires price/term renegotiations) or delays (such as buyer loan conditions that must be cleared prior to loan documents being issued). If either party is in breach of contract, the party not in breach may issue a cure notice to give notice to party in breach that they must correct the situation.

Filed Under: Real Estate Tips Tagged With: purchase contract

Types of Property Deed

June 1, 2018 By Andrew Robb

Deed is a document used to legally transfer title voluntarily from one person to another. The party giving the deed is the grantor and the party receiving the deed is the grantee. When a deed is recorded in the public record, it serves as written evidence of the titleholder’s ownership rights to a property.

In real estate there are numerous types of deed, each of which serve a very different purpose:

1. General warranty deed offers the grantee the most protection against past and future claims on title. In a general warranty deed, the grantor guarantees there are no limitations or encumbrances on title that are not otherwise expressly listed in the deed. The grantor also attests to the absence of any title defects that arose prior to and during the grantor’s period of ownership.

2. Special warranty deed carries limited protection against title defects. In a special warranty deed, the grantor warrants title against defects occurring during their ownership. This amounts to the grantor’s declaration that the property was not encumbered during their possession, whereas a general warranty deed protects the grantee against any defects created prior to and during the grantor’s ownership. Grantees who receive a special warranty deed typically seek further protection against claims on the title by purchasing title insurance.

3. Quitclaim deed releases a grantor’s interest in a property to a grantee with no warranties. The grantor does not state in the deed that they have any title to the property and quit whatever interest they may have. Quitclaim deeds are frequently used to clear a cloud on title. Quitclaim deeds are not a secure way to acquire property but are helpful in relinquishing ownership interest. When ownership claims arise due to community property rights, inheritance, easements or foreclosure, it is said that a cloud on title occurs and quitclaim deeds are used to clear these types of clouds. Customarily, title companies will not issue title insurance if this method is used to convey title.

4. Trust deed is when property owner owes debt to lender, they convey title to their interest in their property to a neutral third party. The third party holds the title in trust as security for the payment of a loan until the borrower’s debt is satisfied. A deed of trust is similar to a mortgage, in that the property is collateral for payment of the loan, however in a deed of trust the third party holds title until the loan is fully repaid to the lender.

5. Correction deed (or deed of confirmation) is used to repair errors in previously executed deeds. If the property was described incorrectly or if a name was misspelled, a correction deed may be created to correct these errors. A correction deed serves only the purpose of correcting an inaccurate deed. It does not convey ownership interest from a grantor to a grantee.

6. Sheriff’s deed is for when a property is sold at court-ordered public auction as the result of foreclosure. Ownership title transfers to buyer with a sheriff’s deed (or deed in foreclosure) and the proceeds from the auction sale are used to satisfy borrower’s debt to lender. A sheriff’s deed does not have any warranties on title but may include a covenant stating the sheriff’s office did not encumber the title.

7. Tax deed is when a taxpayer defaults on their payment of taxes and the government sells the taxpayer’s property to pay for their delinquent taxes. Ownership transfers via tax deed to the buyer when the property is sold. Like a sheriff’s deed, a tax deed does not make any warranties on title.

Filed Under: Real Estate Tips Tagged With: property deed

Phoenix Home Seller Disclosure SPDS

May 21, 2018 By Andrew Robb

What is SPDS?
Sellers in Arizona are obligated, by law, to disclose all known material facts about the property to buyer. The Arizona Buyer Advisory informs seller that if buyer asks about a specific aspect of the property, seller has a duty to disclose the information, regardless of whether they believe it to be material. If something about the property changes after delivery of Seller Property Disclosure Statement (SPDS) to buyer, it must be disclosed and seller also has a legal duty to prevent a statement from being misleading or misrepresented.

Disclosure is best provided by using the Arizona SPDS. The Arizona purchase contract obligates the seller to provide the SPDS to the buyer within 3 days after contract acceptance and obligates seller to provide buyer with a written 5-year insurance claims history from seller’s insurance company regarding the premises (or a claims history for length of time seller has owned the premises, if less than 5 years).

Even if seller has never lived at property, it is important they complete all information they have knowledge of.

The general rule of thumb regarding whether or not to disclose something is “when in doubt, disclose.” There are very specific cases when disclosure is not required. Material facts that do not need to be disclosed are very limited and sellers are protected by stigmatized property law in these few circumstances.

What is “material” has been openly defined and is subjective. It is prudent to act on the philosophy that everything should be disclosed, unless it is considered confidential information. Most questions on the Arizona SPDS start by asking seller “Are you aware of…” so if seller answers “No” to the question if they are aware of any past or present roof leaks, seller is not saying there are no roof leaks, they are saying they are not aware of any roof leaks.

Even with SPDS, sellers may fail to disclose an issue because they believe it was inconsequential or it has been repaired. Just because an issue has been repaired does not mean it does not need to be disclosed. On the contrary, seller is doing themselves a disservice by not completely disclosing any repairs made and indicating what problem called for repair. By providing that disclosure, seller is protecting themselves from possible litigation.

Sometimes sellers fail to disclose something because they don’t want to disclose it out of fear they may jeopardize a sale. In Arizona, a common disclosure topic is the presence of scorpions. On the SPDS, there are specific questions regarding scorpions and other desert creatures. If seller neglects to mention presence of scorpions (if in fact scorpions have been present at property) and buyer subsequently discovers scorpions, talks to neighbors after closing and learns seller had discussed with neighbors how to get rid of scorpions, there would likely be liability to seller.

Certain properties require more specialized disclosures, notably those:
– near public or military airports
– with septic systems or alternative waste water treatment facilities
– using a domestic water well
– built prior to 1978

The Arizona purchase contract requires a Swimming Pool Barrier Disclosure to be included along with buyer’s requirement to initial this disclosure acknowledging they are aware of it.

The HOA Addendum requires disclosure of the existence of any homeowners association, amount of dues and transfer fees if any, and calls for detailed information to be provided to buyer regarding HOA.

If property is located in an un-subdivided, unincorporated area (such as in a county island), seller must provide an Affidavit of Disclosure which details specific attributes about property, including legal and physical access, who maintains roads, how water is provided and other important issues. This disclosure must be made at least seven days prior to close of escrow. The buyer then has the right to rescind or cancel the transaction for a period of five days after receipt of affidavit of disclosure. This affidavit must also be notarized and recorded with the deed.

What information is contained in the Arizona Seller’s Property Disclosure Statement?
The SPDS starts with Ownership and Property Information, which includes information on owner/occupancy, rental information, existing liens or assessments, pending litigation regarding the property or HOA if any, title issues, access, road maintenance, zoning, violations and homeowner’s insurance claims.
Building and Safety Information calls for disclosure regarding the structure, damage to property by natural causes, wood infestation, heating and cooling, plumbing, swimming pool/spa/hot tub/sauna/water feature, electrical and mechanical systems, plus information including presence of scorpions, rabid animals, bee swarms, rodents, owls, reptiles or other wild life. It also addresses whether additional construction has been done to the property and whether permits were required and obtained.
Utilities Information asks what services property receives, who provides these services, and covers details regarding water source (city, private, well or hauled), mail delivery and solar systems if any.
Environmental Information covers soil issues, external factors such as airport noise, traffic noise, neighborhood noise and nuisances, plus drug lab and superfund area disclosure, flood plain, water leaks on property and presence of mold if any.
Sewer/Wastewater Treatment addresses questions relating to sewer connection or on-site waste water treatment (septic system) facility if any.
The final section provides seller with an opportunity to disclose anything else that may be material to buyer and to provide additional explanations.

Filed Under: Real Estate Tips Tagged With: seller disclosure, spds

AZ Septic System

May 9, 2018 By Andrew Robb

A septic system is used to treat wastewater from a home whenever property is not connected to a sewer line. Septic tanks vary in size (often will hold about 1500 gallons of wastewater), are typically burried 18 to 24 inches below surface, are clearly marked with an identifying pole and should not be driven over or parked on. Septic systems in Arizona also are surrounded by either a leach field or sit on top of a leach pit, to further allow for effluence from the septic tank.

In Arizona, the On-Site Wastewater Treatment Facility Addendum is used when property includes a septic (wastewater) system. It requires seller to provide buyer with copies of all documents pertaining to the septic tank that are in seller’s possession within 5 days of contract acceptance, to have septic system inspected at seller’s expense within 6 months prior to close of escrow (but no later than 3 days prior to close of escrow) and to deliver completed report of septic inspection to buyer upon receipt. It also requires seller to pay for repairs to correct physical or operational deficiencies of the septic system, up to 1% of the property purchase price (or another agreed upon amount during purchase contract negotiation) and provides remedies if repair cost exceeds amount agreed upon in contract. If seller required septic repair costs exceed previously agreed upon amount, buyer may cancel contract or agree in writing to pay the additional repair cost.

Because the standard Arizona purchase contract language calls for seller to have septic system inspected at their own expense and any repairs up to 1% of purchase price made also to be made at seller’s expense, it is vital that sellers with septic tanks understand the costs relating to inspection and possible required repairs of this system to avoid problems during escrow.

Buyer responsibilty includes delivering to escrow company a complete Arizona Department of Environmental Quality (ADEQ) Notice of Transfer of Ownership of an On-Site Wastewater Treatment Facility prior to close of escrow, which instructs escrow company to file the notice and filing fee and indicates who will be paying filing fee.

Filed Under: Real Estate Tips Tagged With: septic

READ REVIEWS FROM MY CLIENTS

Real Estate Cure Period

AZ Purchase Contract Timeline

Types of Property Deed

Phoenix Home Seller Disclosure SPDS

AZ Septic System

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