FACTS:                    

The licensee is the exclusive agent involved in the marketing and sales of new homes in a subdivision for the builder/developer. The builder/developer has a standard addendum that is signed by the parties in every transaction advising the buyer of the right to receive a copy of the subdivision public report as required by A.R. S. Section 32-2185.06.  The licensee is concerned that the disclosure is made by way of an addendum rather than in the contract itself. 

ISSUE:                      

Is the statutory disclosure in an addendum sufficient to comply with Arizona law?

ANSWER:                

See discussion.

DISCUSSION:         

A.R.S. §32-2185.06 provides in pertinent part:

All agreements and contracts for the purchase or lease of subdivided land from a subdivider, owner or agent shall clearly and conspicuously disclose, in accordance with regulations adopted by the commissioner, the nature of the document, the purchaser’s right to receive a copy of the public report and, in the case of unimproved lots or parcels not exempted by regulation pursuant to Section 32-2185.01, the purchaser’s right to rescind the agreement as provided in Section 32-2185.01.  Any contract, agreement or lease which fails to make disclosures pursuant to this section shall not be enforceable against the purchaser.

The critical inquiry is whether the builder/developer’s addendum qualifies as an “agreement” or “contract” as those terms are used in the statute.  While arguably, the addendum is an agreement as contemplated by the statute, the best practice is to include the statutory disclosure in the contract itself.