Facts:

The seller and buyer executed a Residential Resale Real Estate Purchase Contract (Contract).  In the Contract, the seller agreed to pay the appraisal.  Buyer is now cancelling the contract based on the appraisal contingency due to a low appraisal.  Seller is demanding to see the appraisal because seller paid for the appraisal.

Issue:

Is the buyer required to disclose the appraisal to the seller?

Answer:

No.

Discussion:

Even though the seller chose to pay for the appraisal, the mortgage lender orders the appraisal and is the appraiser’s client; not the seller.  Pursuant to the Equal Credit Opportunity Act, the lender is required to automatically send a free copy of the home appraisal and all other written valuations on the property after they are completed to the applicant (aka buyer).

The Contract does not require the buyer to disclose the appraisal.  The appraisal constitutes an “opinion of value,” which is addressed in Section 5b of the Contract.  A buyer has a duty to disclose to the seller all known facts materially affecting the transaction.  Lombardo v. Albu, 199 Ariz. 97, 14 P.3d 288 (2000).  An appraisal is not a fact materially affecting the transaction, but rather, an opinion of value.