What are potatoes?

Spuds is what REALTORS call a Seller’s Property Disclosure Statement (SPDS). It is a multi-page document that sellers often provide with information about the home and all of its major systems (eg, air conditioning, plumbing, roofing, etc.).

In Arizona, sellers are required to disclose any material facts they know about the property. The SPDS is a form created by the Arizona Association of REALTORS (AAR) to standardize how sellers disclose important property information.

The AAR Standard Residential Purchase Contract has a provision that requires sellers to provide SPDS to buyers within 5 days of accepting the contract. Buyers have until the end of the inspection period or 5 days from receipt of the SPDS (whichever is later) to report any unapproved items disclosed in the SPDS.

Contrary to what many people think, the SPDS is not a legal requirement. It is just a provision in the AAR Standard Residential Purchase Agreement. Sellers are required by law to disclose important information. Sellers can do it in any other document they choose.

The other common myth about SPDS is that once the seller provides it, they are no longer obligated to disclose new material facts. That couldn’t be further from the truth. The seller’s obligation to disclose remains for the entire warranty period. If the seller becomes aware of a material fact that was not originally disclosed, he has the obligation to disclose it and give the buyer 5 days to review and notify the disapproved items. Usually this is done by issuing a revised SPDS.

Many sellers will not accept contracts that require them to provide an SPDS and will ask buyers to remove the provision from the contract. Banks selling foreclosures will typically ask buyers to waive the SPDS based on the claim that the bank has limited knowledge of the property. One important thing to remember is that even when SPDS is waived, the seller still has an obligation to disclose all material facts.

Your REALTOR should review the SPDS, its significance, and the implications when sellers ask buyers to waive the SPDS. Buyers need to understand all the ramifications and make an informed decision whether or not they are willing to forgo SPDS.

And before closing this article I would like to leave you a thought. If you are a seller, I highly recommend that you prepare an SPDS when you put the property on the market. You can even make the document available to potential buyers. It will show them that you are aware of your obligations and that if they decide to submit an offer, you will not cause delays in the process. Very few sellers do that and it usually has such a positive impact on potential buyers. If you do this when you list the property, once you accept an offer, all you have to do is re-read the document and make sure it is still valid and up to date. Ask your REALTOR to help you fill out the SPDS as soon as possible.