ContractsIntermediateArizona Exam

An Arizona seller who provides a Property Disclosure Statement (SPDS) that omits known material defects is liable for:

ANothing, since the buyer retains the full legal duty to inspect the property and is charged with knowledge of all defects discoverable through a reasonable inspection

BMisrepresentation or fraudulent concealment, potentially allowing the buyer to rescind the contract or sue for damagesCorrect

COnly a maximum $500 administrative fine from ADRE for the first violation, with no civil liability to the buyer unless the buyer also proves actual out-of-pocket financial loss

DCivil liability only if the buyer specifically asked the seller about the defect before signing the contract and the seller denied knowledge of the condition in writing

Why Misrepresentation or fraudulent concealment, potentially allowing the buyer to rescind the contract or sue for damages Is Correct

Answer B: Misrepresentation or fraudulent concealment, potentially allowing the buyer to rescind the contract or sue for damages

Deliberately omitting known material defects from the SPDS constitutes fraudulent concealment or misrepresentation. The buyer can rescind the contract, recover damages, and the seller may face license discipline if they are licensed.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

People Also Study

Key Terms to Know

Earnest Money

A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.

Contingency

A condition in a purchase contract that must be satisfied before the sale can proceed to closing.

Purchase Agreement

A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.

Option Contract

A contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.

State-Specific Concepts

Disclosure RequirementsDRE Regulation

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