What is it? Why is it Important?
The SPDS is an important document. As a homebuyer, you naturally want to know all the material facts about the property you’re considering buying. As a seller, it’s in your best interest to disclose material facts about your property.
What is a Material Fact?
A material fact is any fact that could or would affect a reasonable person’s decision to buy, sell, or lease a property. For instance, if you want your home to have a sewer connection, but find out that the home is on a septic system, that would be a material fact that could affect your decision to buy.
What is the Seller’s Property Disclosure Statement (SPDS) ?
Since sellers are required by law to disclose material facts about their property, the SPDS was developed to “assist the seller in making these legally required disclosures and to avoid inadvertent nondisclosures of material facts.”*
Sellers are cautioned to be as truthful and thorough as possible when completing the SPDS. In fact, nondisclosure of a material fact can be considered the same as fraud in a civil court.
What Information is Included in the SPDS?
The SPDS is divided into six sections:
Property & Ownership: This section provides information about the property such as the address & ownership. It will give information such as who legally owns the property, whether there is an HOA, if there are any title issues with the property, who maintains the road/streets, etc.
Building & Safety Information: This is a large section that contains specific information about the property. It includes the age of the roof and if there are any present roof issues or past repairs. It will disclose if there are or have been any foundation issues. It will include if there are past or present issues with termites and if so, when were they treated. In addition, specific information will be given about the heating & cooling systems, the plumbing, the pool & spa, and the electrical systems.
Utilities & Services: This section will list all the utility services for the property, and will provide phone numbers for the utility providers.
Sewer/Wastewater Treatment: This section is where you’ll learn if the property is connected to a sewer or if it’s on a septic system.
Environmental Information: This section will disclose if there are any issues with soil settlement, erosion or drainage problems. It will also disclose if the property is located in the vicinity of an airport, railroad, landfill, or if it’s located in a flood plain.
Other Conditions or Factors: This section gives the seller the opportunity to disclose any other material facts not covered in the other sections.
What Doesn’t Have to be Disclosed in the SPDS?
By law, the seller isn’t obligated to disclose the following about their property:
- That it’s been the site of a natural death, suicide, homicide, or another crime classified as a felony
- Has been owned or occupied by a person exposed to HIV or diagnosed as having AIDS or any other disease not known to be transmitted through the occupancy of real estate
- Located in the vicinity of a sex offender
What is the Buyer’s Responsibility in Relation to the SPDS:
The SPDS is designed to educate you, the buyer. The SPDS will basically tell you a story about one of the biggest purchases of your life; to say it’s important would be an understatement. Therefore it’s vital that you take it seriously. When you receive a copy of the SPDS you should follow these steps:
Read it Thoroughly: The key to the SPDS is to read it! You don’t want to move in and discover a roof leak that was disclosed to you in writing but you just didn’t bother to read it. Take the time to read the SPDS cover to cover and make note of anything you are concerned about.
Ask Questions: If there’s anything you don’t understand or that doesn’t sit right with you ask questions and do your research. If you aren’t able to find the answers you need and aren’t sure where to look, let your Realtor® know and they can assist in pointing you in the right direction. They can also liaise with the seller’s agent if you need further information.
Verify, Verify, Verify: Even though the seller fills out the SPDS as thoroughly as possible, it can still be subject to human error. If something is really important to you, verify it. If the amount of the HOA dues is important to you, call the HOA and verify it. Do your research and don’t leave anything up to chance.
Share it With Your Inspector: It’s a good idea to provide your home inspector with a copy of the SPDS and point out if there’s anything that causes you concern. Let them know what things you’re worried about and have them inspect those elements more closely. For instance, if the seller disclosed a leak at the front window that was repaired, you’ll want the inspector to pay close attention to how the leak was repaired and any damage that was the result.
Sign it: You’ll be required to initial each page of the SPDS and sign and date the last page. By signing you’re acknowledging receipt of the document. It doesn’t mean that you’re OK with the things the seller is disclosing. If there’s anything you disapprove of, you can include it when you request repairs.
The Bottom Line
The SPDS is designed to protect the seller. Sellers should take care in disclosing all information accurately and thoroughly. If a seller violates disclosure law by misrepresenting or not disclosing required information, the buyer has the right to pursue legal action against them for failure to disclose, fraud or misrepresentation. As a result, the buyer may be awarded substantial monetary damages.
The SPDS is also designed to educate the buyer. Buyers should take time to read the SPDS properly, verify the facts and use the information to make an educated decision whether or not to move forward with purchasing the home.
Contact the Donnelly Group
If you are considering buying or selling a home in metro Phoenix, the Donnelly Group has the experience and expertise to help you. Please don’t hesitate to contact our team at 480-792-9700 or by email, we’d love to help.
* https://www.aaronline.com/2023/01/13/residential-sellers-property-disclosure-statement/
