FACTS: A seller listed his property for sale for $75,000. The dwelling on the land had minimal value. However, on the land there was a horse barn and stalls that were valued at $50,000, which the seller believed was the real value of the property.

The seller then entered an Arizona REALTORS® Residential Resale Real Estate Purchase Contract with a buyer. The seller and buyer also executed a Seller Financing Addendum (a Seller Carryback).

Six months after the close of escrow, the seller learns that the buyer has listed the barn and stalls on Facebook and is selling them for $5,000. 

ISSUE: Can the buyer sell the barn and stalls when they are the main value of the property the seller has financed?

ANSWER: Probably Not.

DISCUSSION:         

The definition of waste as found in 56 Am.Jur., Waste, § 2, Page 450 (1947), reads as follows:

‘Waste is . . . the destruction, misuse, alteration, or neglect of premises by one lawfully in possession thereof, to the prejudice of the estate or interest therein of another.’

And at § 4, Page 452:

‘Waste is classified as voluntary or actual, and permissive or negligent waste.  Voluntary waste may be done by such acts as destroying, altering, or removing buildings, or cutting down timber trees.  The failure of the tenant to exercise the ordinary care of a prudent man for the preservation and protection of the estate is permissive waste.’

Jowdy v. Guerin, 10 Ariz.App. 205, 208, 457 P.2d 745, 748 (Ariz. App., 1969)

Here, the buyer is likely to commit waste to the property.  If the buyer defaulted on the note and the seller had to foreclose to take back the property, the property’s value would be greatly diminished.