Under the old purchase contract, agents would list warranted items by the seller such as the pool, electrical, and plumbing.
AFN file photo

As of Feb. 1, the “as is” law in purchase contracts changed for buyers and sellers of real estate.  

Seller warranties as previously defined in the old purchase contract required that all heating, cooling, mechanical, plumbing and electrical systems, free-standing range/oven and built-in appliances be in working condition.

Now, those warranties are no longer included within the Arizona Purchase Contract. The burden to determine whether these items are in proper working order has shifted to the buyers and their agents.

“I would say this was a long time coming because it reduces the confusion between the seller and buyer, especially in the second stage of the home-buying transaction called for in the ‘Buyer Inspection Seller Response,’” said Carl Perera, an Ahwatukee real estate agent with My Home Group.

This means buying agents need to be more diligent in the way they write and review contracts, he said.

But it doesn’t mean that sellers are off the hook. They still must disclose repairs that need to be made.

“So, the seller still has to disclose everything they know to the best of their ability,” added Perera. “If for some reason they completely forgot something on the disclosure, the buyer definitely would want to do their due diligence and do a full inspection on the property.”

Under the old purchase contract, agents would list warranted items by the seller such as the pool, electrical, and plumbing.

Perera said this often caused confusion since “a lot of agents would list this under the warranted items to be repaired, thinking the seller was obligated to actually repair these things.”

It was really meant to notify the buyer that it’s a warranted item. “The seller still had no obligation to fix it,” Perera explained, adding:

“The buyer then has the decision to walk away from the transaction. So, it becomes more of a question of how much does the seller want to sell the house and if they want to make repairs.”

The seller is not obligated to fix anything.

“And that was even true with the old contract. It was just more confusion. It was listed under a warranted item in the main purchase contract – the old version – and now they just took it out to reduce conflict,” said Perera. “It makes it convenient for sellers who don’t want to have added repair expenses to the transaction.”

Oftentimes, sellers who don’t want to make a repair would give a credit towards the purchase price.

In addition, there’s more space in the new purchase contract for personal property to be included in the price.

“Pretty common thing for refrigerators, washers/dryers to be included in the sale,” said Perera. “Sometimes, there’s maybe a TV thrown in with the sale. So, now we have more space to add those items. Even spas and hot tubs are becoming very common.”

Drapes are another item agents used to argue about, according to Perera. “Actually, that’s a fixture to be included with the house. A lot of people don’t realize that. They think they’re going to take the drapes with them.”

Windows and screen doors also must stay. One interesting debate was whether a TV was a fixture if it was attached to the wall,

“They have determined and clarified that only the brackets holding the TV are considered a fixture to be included with the sale, not the TV itself, unless otherwise specified,” said Perera.

There’s another change in the purchase contract when it comes to escrow money. “The new version of the contract places the burden on the earnest money on the buyer,” explained Perera.

“The old contract actually placed it on the broker. So, when we wrote the contract and turned it in, the broker had to have the earnest money or check in their hand. Now, it’s actually the responsibility of the buyer to get it to the escrow company. So, that’s a pretty big change.”

The seller concessions portion of the purchase contract also has changed.

This impacts veterans and military members applying for a VA loan because it stipulates they don’t have to pay for certain things during the transaction.

“For example, the termite inspection is not allowed to be paid by the VA buyer and it usually is covered by the buyer. So, these things need to be negotiated during the process,” said Perera.

“You definitely want an agent and lender that’s familiar with the non-allowable cost to the VA loans.”

Overall, Perera said the purchase contract revision is a win-win for all parties involved.

“It’s going to be better in the long run because it’ll reduce arguments from agents,” he said.

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