By Jones Osborn II

A number of different laws - some old, some new - apply to nearly every sale of vacant land in the State of Arizona. These laws are scattered throughout a number of different statutes, making it difficult to determine exactly which laws apply to any given sale.

This memo will organize and summarize only the laws that apply to the sale of a parcel of vacant land. This memo does not deal with the sale of land improved with a building (or land sold on a contract obligating the seller to construct a building), and it does not deal with the requirements for legally splitting a parcel of land or creating a subdivision. Most cities and counties, as well as the state, have laws and regulations governing the splitting of lots or the creation of subdivisions. There are even federal laws regulating the sale of lots in large subdivisions.

Categories. For purposes of regulation, Arizona law puts all vacant land into one of three categories:

1. Subdivided Land. Generally, this is land that has been split into six or more parcels as part of a common plan (unless each parcel is 36 acres or more in size). For purposes of this memo we will assume that the property has been legally subdivided by a prior owner, and that the sale is the sale of a single lot.

(a) The sales contract must inform the buyer of his right to receive a copy of the public report issued by the Arizona Real Estate Department at the time the subdivision was approved. A contract not containing this disclosure is not enforceable. (A.R.S. § 32-2185.06). The buyer must also be given a copy of the public report before the seller signs a contract agreeing to sell the lot. (A.R.S. § 32-2183(A)). This is true even if the lot has been sold several times since the subdivision was approved--every subsequent seller must inform his buyer of his right to receive a copy and must actually give his buyer a copy of the report, and the buyer must sign a receipt. This requirement does not apply to land zoned and restricted to commercial or industrial use.

(b) The sales contract must disclose the buyer's right to rescind the sale within seven days (or six months if the buyer has not inspected the lot); and if the buyer has inspected the lot, he must sign an affidavit so stating. (A.R.S. § 32-2185.01(D) and -(E)). As in paragraph (a) above, this requirement applies to the sale by the original subdivider and to all subsequent sellers.

(c) The property must have permanent legal access that can be traversed by a conventional motor vehicle. (A.R.S. § 32-2185.02). If the property lacks such access, the buyer has three years to rescind the transaction.

2. Unsubdivided Land. This term is misleading. Under Arizona law, "unsubdivided land" is actually land that has been divided into six or more parcels, each of which is at least 36 acres in size. However, if each parcel is 160 acres or more in size, the parcels do not constitute "unsubdivided land," and are not subject to the following rules.

Here are the requirements that apply to "unsubdivided land":

(a) The seller must furnish the buyer a copy of the Public Report issued by the State Real Estate Department and obtain a receipt for it from the buyer. (A.R.S. § 32-2195.03(A)).

(b) The sales contract must inform the buyer of his right to rescind within seven days if he has inspected the property (or within six months if he has not inspected the property). (A.R.S. § 32-2195.04(D) and -(E)).

(c) If the land is not within the city limits of a city or town, effective as of May 15, 2000 the law requires the seller to furnish the buyer an Affidavit of Disclosure at least seven days before the closing. The buyer must acknowledge receipt of the Affidavit in writing, and the acknowledgement must be recorded at the closing. The buyer has the right to rescind the transaction for a period of five days after receipt of the Affidavit. In general, the Affidavit contains all sorts of relevant information about the property, including access, utilities, water, flooding, the use of septic tanks, and so on. A form for the Affidavit is attached to this memo. (A.R.S. § 11-806.3).

The only specific regulation applying to such sales is that the seller must comply with the Affidavit of Disclosure rules described in paragraph 2(c) above if the land is located outside city limits.

4. General Rules. In addition to the specific rules applying to lots of various sizes, there are rules and regulations applying to the sale of real property of any size, whether or not subdivided. These include the following:

(a) The seller must inform the buyer in writing if the property has been subject to remediation for contamination by hazardous substances. The only exception is if the remediation is so thorough and complete that it meets the standards for residential use. (A.R.S. § 33-434.01).

(b) The seller must inform the buyer of any residential property, including subdivision lots, if the lot is "in the vicinity" of a military airport. The State Real Estate Department has maps indicating which property is so located. (A.R.S. § 28-8484).

(c) The seller must, of course, make any disclosures necessary to avoid fraud. Although the seller of real property is generally allowed to remain silent about defects on the legal theory of caveat emptor, the seller cannot actively mislead the buyer or do or fail to do other things which could amount to fraudulent conduct.

Conclusion. The sale of almost every parcel of vacant land is subject to one or more of the foregoing legal requirements. The failure to properly comply with these requirements can lead to the rescission of the contract or civil or criminal liabilities or penalties. In addition, if land is split or subdivided in connection with the sale, it may be necessary to comply with extensive federal, state, county and/or local subdivision or lot split regulations (which is a separate topic not covered by this memo).