By Lisa Larkin, Esq.
Managing Partner/Associate Broker
As an agent of one of the parties, real estate licensees in Arizona are given constitutional authority to negotiate and draft contracts on their behalf. While this legal authority gives them the right to draft contracts from scratch, if the agent is a member of The Arizona Association of REALTORS (AAR), they have access to standard forms that attempt to cover most situations with an emphasis on neutrality and fairness for buyers and sellers. Unlike some other states, these contracts are not automatically contingent upon attorney review and approval. If you are buying or selling in Arizona, here are some tips that will help you to navigate the process when dealing with a large real estate investment.
1. Be clear about who your agent represents. Dual Agency is legal in Arizona and if you have consented to dual agency your agent can still provide valuable services but will not be allowed to take sides in negotiations or otherwise.
2. Be a proactive participant in the process. Read the purchase contract, counter offers, addenda and other forms and make sure that you understand what you are agreeing to. The best practice is to read it BEFORE you begin negotiating. The contract is legally binding. Sellers should fully disclose all material facts and update that disclosure when appropriate and buyers should read the AAR Buyer Advisory.
3. Sellers should expect proof that the buyer is qualified or has the cash necessary to purchase the property. Don’t go shopping without proper documentation and don’t accept offers without it. If the buyer is getting a loan, a prequalification is not an approval so all parties should monitor the loan conditions through final approval.
4. The transaction is not guaranteed to be what you negotiated on day one, or to close no matter how solid it may look. I could write a book about all the things, expected and unexpected that can go wrong or change, often at the last minute due to both usual and freak circumstances. Changes could include repairs, value and price, costs, closing date, acts of God and more.
5. You have the right to consult a lawyer, at any time, but your lawyer cannot change the terms of a legally binding contract without mutual consent.
As a practical matter, please be sure to be open and honest with your agent and share with them what is most important to you, including changes in circumstances, intent or needs. Even if your agent is a Limited Dual Representative, they pledge not to disclose confidential information that you share with them unless there is a legal obligation to do so. Finally, your agent can only act on what you share with them. You should let them know if your expectations are not being met so that they have an opportunity to address your concerns.
Tips for home sellers and buyers:
Five legal tips for Arizona home market