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Public Reports

A developer of a new housing community is generally required to obtain approval of a Subdivision Public Report from the Arizona Department of Real Estate, and issue the Report to prospective buyers. A Public Report is designed to provide basic information about the community to the buyer, such as availability of utilities, access and schools, among many other things. There are three primary issues that arise regarding Public Reports.

First, on occasion, the parties enter a purchase contract that is subject to the Public Reporting law without the seller providing a copy of the Public Report to the buyer. In those situations, the buyer generally has the right to rescind (cancel) the purchase and receive a refund of all amounts paid to the seller.

Second, sometimes Public Reports contain misrepresentations or the developer omits material (important) information. There, the buyer also may have the right to rescind the purchase and receive a refund of all amounts paid to the seller or the buyer may obtain the difference between (1) the purchase price of the property, plus the cost of the improvements to the property, and (2) the market value of the property on the date that a lawsuit is filed.

Third, occasionally there are material changes to a subdivision plan after the initial Public Report was issued. Pursuant to A.R.S. § 32-2184(A),

it is unlawful for any subdivider, after submitting to the commissioner the plan under which a subdivision is to be offered for sale or lease, and securing his approval, to change the plan materially or to continue to offer lots or parcels within the subdivision for sale or lease after a change has occurred that materially affects the plan without first notifying the commissioner in writing of the intended change.

If there is a material change that adversely affects a buyer under a contract that has not been completed (the transaction has not closed escrow), the buyer may have the right to cancel the purchase and receive a refund of all amounts paid under the contract. In that case, the buyer must give written notice to the seller within ten days after receiving written notice from the seller of the material change.