Arizona Real Estate Law Limits Time for Failure to Disclose Defects

One year after a buyer moves into a home, which was a new home when the seller purchased the home three years earlier, there is significant roof leaking due to heavy rains. A roofing contractor says that the cost to repair the roof will be $15,000. The roofing contractor also says that there is significant prior roof damage and that, because of stains on the ceiling and walls of the master bedroom, the seller and probably the real estate brokers knew that there were roof problems when the buyer purchased the home. The buyer is extremely upset because no one disclosed these roof problems. According to Arizona real estate law, after one year, had the time expired for the buyer to make a claim for the $15,000 repair costs against the seller? Against the real estate brokers? Against the homebuilder? Can the buyer be reimbursed for attorneys fees?

Statute of limitations

The statute of limitations for breach of a written contract is generally six years from the date that the breach of the written contract was discovered. A.R.S. §12-548. This six-year statute also applies to claims by both the original buyer and subsequent buyers against homebuilders for breach of the contractual implied warranty of proper construction, but this claim is limited to no more than eight years after completion of the home, no matter when the construction defect was discovered. A.R.S. §12-552. The statute of limitations for fraud is generally three years from when the fraud was discovered. A.R.S. §12-543. Similarly, the statute of limitations for negligence is generally two years from when the negligence was discovered. A.R.S. §12-542.

Attorneys Fees

A successful plaintiff is generally entitled to attorneys fees in breach of contract and in fraud claims. In negligence claims, however, no attorneys fees are awarded to a successful plaintiff.

Liability of Homebuilder

The homebuilder may be liable to the buyer for breach of the contractual implied warranty if there was improper construction of the roof. The buyer would have four more years under the eight-year limitation to file a claim against the homebuilder because the home was built four years ago. The buyer should be entitled to reasonable attorneys fees under A.R.S. §12-341.01.

Liability of Seller

Under the Arizona Association of REALTORS® standard purchase contract the seller has a contractual duty to disclose to the buyer known defects in the home such as a defective roof. If the seller knew of the defective roof, the buyer would have six years after discovery of the defective roof to file a claim for breach of written contract against the seller. Not only does a breach of written contract claim have a relatively long six-year statute of limitations, a buyer is entitled to attorneys fees under A.R.S. §12-341.01. Finally, the buyer would only have three years to file a fraud claim against the seller, but should be entitled to attorneys fees for prosecuting this fraud claim. If the seller was only negligent in failing to disclose the roof, i.e., the seller should have known that the roof was defective, the seller has no liability.

Liability of Real Estate Brokers

In regard to a buyer’s claims against the real estate brokers, the real estate brokers were not parties to the purchase contract. Therefore, there is no breach of contract claim and the buyer would only have three years to prosecute a claim against the brokers for any fraudulent non-disclosure, and only two years to prosecute a claim for any negligent non-disclosure, i.e., the brokers should have known of the defective roof. If the real estate brokers knew of, and fraudulently failed to disclose the defective roof, the buyer is probably entitled to attorneys fees. If the real estate brokers were only negligent, i.e., should have known of the defective roof, the buyer is not entitled to attorneys fees.

Article Source: Combs Law Group