3.2 Arizona Seller Property Disclosure Statement (SPDS)

What the SPDS Is and When It Is Due

The Seller's Property Disclosure Statement (SPDS) is the AAR's six-page form on which a seller discloses known material facts about a resale home. Under the standard contract the seller delivers the completed SPDS within 5 days of contract acceptance, and the buyer reviews it during the inspection period. The SPDS is the seller's statement, not the agent's, but the agent still owes the buyer disclosure of any known material latent defects regardless of what the seller writes.

Key principle: the SPDS is a disclosure, not a warranty. The seller answers from actual knowledge and is not required to investigate or hire experts. "Do not know" is an honest, acceptable answer when truly unknown.

Typical exemptions

What the seller MUST disclose vs. what is protected

The exam loves to contrast physical defects against "stigma." Under A.R.S. § 32-2156, an owner or agent has no duty to disclose that the property was the site of a natural death, suicide, homicide, or felony, that a prior occupant had a non-communicable or terminal disease such as HIV/AIDS, or that a sex offender lives nearby (buyers can check the public registry). By contrast, a leaking roof, cracked foundation, failed septic, or unpermitted addition is a material physical fact that must be disclosed.

The distinction the exam tests is physical/material versus stigma. A defect that affects the property's value, safety, or use must come out; a fact that affects only a buyer's subjective comfort but not the bricks-and-mortar is generally protected. When a buyer specifically asks a direct question, however, the agent and seller may not respond with a knowing lie even about a protected matter, because affirmative misrepresentation is always actionable. The safest professional posture is: disclose all known material physical facts proactively, and answer direct questions truthfully rather than concealing.

SPDS Categories, Federal Add-Ons, and Liability

The five disclosure categories

The SPDS walks the seller through structured questions. Knowing the buckets helps you answer scenario questions:

1. Property/ownership history — prior damage (fire, flood), repairs, additions, and whether permits were obtained.
2. Structural components — roof age and leaks, foundation, walls, windows, drainage.
3. Systems and built-ins — HVAC, plumbing (including any polybutylene), electrical panel, water source (well vs. city), septic vs. sewer.
4. Environmental — known mold, asbestos, radon (if tested), soil settlement/expansive soil, and prior pest treatment.
5. Legal/neighborhood — HOA dues and pending assessments, easements, zoning, and known nuisances (airport noise, nearby commercial use).

Required federal and contract add-ons

• Lead-Based Paint Disclosure: federally required for any home built before 1978, regardless of the SPDS. The seller must disclose known lead paint and give the buyer the EPA pamphlet plus a 10-day opportunity to test (which the buyer may waive).
• Affidavit of Disclosure: required by A.R.S. § 33-422 when selling five or fewer parcels of unsubdivided land in an unincorporated area of a county — it covers road access, utilities, and flood status.
• CLUE / insurance claims history: the contract calls for a 5-year insurance claims history delivered within 5 days of acceptance so the buyer can gauge prior water or fire claims.

Updating and liability

The seller must update the SPDS in writing if a previously disclosed condition changes or a new defect is discovered before close. Failure to disclose a known material defect exposes the seller (and potentially the agent) to claims for fraud, misrepresentation, rescission, and damages. Arizona case law (e.g., the duty recognized in Hill v. Jones) confirms a seller cannot stay silent about a known termite history a buyer could not reasonably discover.

Best practice checklist: answer every question, disclose when in doubt, never guess, update promptly, and keep a signed copy. Over-disclosure is rarely actionable; concealment routinely is.

How the SPDS interacts with the inspection period

The SPDS and the buyer's independent inspections work together. The seller's disclosures tell the buyer where to look; the buyer's licensed inspectors then verify condition. Because the buyer has an unrestricted right to cancel during the inspection period for any reason, an accurate SPDS actually protects the seller: a buyer who later sues for a defect that was clearly disclosed has a far weaker claim. Conversely, a defect that the seller knew, omitted, and the buyer could not reasonably have discovered is the textbook fact pattern for a post-closing fraud or rescission action.

Remember the agent's parallel duty. Even if the seller leaves an item blank, the listing agent who personally knows of a material latent defect must disclose it to the buyer. The SPDS does not transfer or eliminate the agent's own disclosure obligations under Arizona license law. When in doubt, the answer on the exam is almost always 'disclose in writing.'