Arizona For Sale by Owner: Sell Without a Realtor

Selling your own home in Arizona is legal, common, and can save you tens of thousands of dollars in commissions. It is also the one moment in most people's lives when they sign a six-figure contract with no professional standing between them and a mistake. This article explains what an Arizona for sale by owner contract must contain, what Arizona law requires you to disclose, how title and escrow actually work, what taxes you will owe, and the traps that turn a smooth closing into a lawsuit.

 

Everything below applies to Arizona residential real estate. It is general information, not legal advice for your transaction.

What You Are Actually Taking On When You Sell Without a Realtor

A listing agent performs four separate jobs. When you sell without one, all four land on you, and they are not equally easy to replace.

 

Marketing and pricing. This is the job most people focus on, and it is the easiest to do yourself. Photographs, a flat-fee MLS listing, syndication to the major portals, a yard sign, and a look at recent comparable sales will get you most of the way there.

 

Screening buyers. Harder than it looks. A buyer who cannot close wastes six weeks of your life and can cost you the selling season. You need a preapproval letter from a real lender, not a prequalification email, and you need to verify the source of the down payment.

 

Managing the transaction. Escrow deadlines, inspection responses, appraisal problems, lender conditions, and the walkthrough. Tedious but learnable.

 

Producing the legal documents. This is the job you cannot simply take over, and it is where unrepresented sellers get hurt. A real estate agent hands you a preprinted form. Without an agent, no preprinted form is lawfully available to you, and the escrow company will not write one for you.

Who Is Allowed to Draft Your Contract in Arizona

Arizona is unusual. Article 26, Section 1 of the Arizona Constitution gives licensed real estate brokers and salespeople the constitutional right "to draft or fill out and complete, without charge, any and all instruments incident thereto including, but not limited to, preliminary purchase agreements and earnest money receipts, deeds, mortgages, leases, assignments, releases, contracts for sale of realty, and bills of sale."

 

Read that carefully. The right belongs to the licensee, not to you. When there is no licensee in your deal, the constitutional workaround disappears and you are left with two lawful sources of a contract: you write it yourself, or a licensed Arizona attorney writes it for you.

 

Three things people assume will fill the gap, and why they do not:

 

The Arizona REALTORS® forms. The Residential Resale Real Estate Purchase Contract published by Arizona REALTORS® is copyrighted and licensed to association members. It is not a public form, and it was not drafted to be filled in by an unrepresented seller. It is also deliberately even-handed, which is not what you want when you are the one signing.

 

The escrow or title company. Escrow is a neutral stakeholder. The escrow officer will prepare escrow instructions, a settlement statement, and often the deed, but will not draft your purchase contract, will not advise you on terms, and will not tell you that the contract you handed them is bad for you. Escrow's job is to follow instructions, not to protect you.

 

An online contract template. Generic templates are written for no state in particular. They routinely omit Arizona's community property joinder requirement, the affidavit of legal value, Arizona's disclosure rules, and the septic transfer requirements, and they frequently contain financing and remedy language that favors the buyer.

The Purchase Contract: Every Term It Must Contain

What follows is a clause-by-clause walkthrough of an Arizona residential purchase contract from the seller's side. If a term below is missing from a contract you are asked to sign, that is not a simplification. It is a gap that will be filled later by a court, by the buyer, or by whoever has more leverage when the dispute arises.

1. It Must Be in Writing and Signed

Arizona's statute of frauds, A.R.S. Section 44-101, makes an agreement for the sale of real property or an interest in real property unenforceable unless it is in writing and signed by the party to be charged. Emails, texts, and handshake agreements about price are not an enforceable contract to sell a house. Neither is a signed contract that leaves an essential term open.

 

Electronic signatures are fully valid in Arizona under the Arizona Electronic Transactions Act, A.R.S. Section 44-7001 and following. DocuSign, Dotloop, and Adobe Sign all produce enforceable signatures. The deed is the exception discussed below, because it must be notarized and recorded.

2. The Correct Legal Name of Every Seller

The seller on the contract must exactly match the vesting on the current deed. This is the single most common defect in owner-drafted contracts, and it is the one escrow will catch late, sometimes days before closing.

 

Get out your existing deed and read the vesting line. Then match it:

• Married couple. Arizona is a community property state. A.R.S. Section 25-214(C) requires both spouses to join in any transaction for the acquisition, disposition, or encumbrance of an interest in community real property. Both spouses sign the contract and both sign the deed, even if only one spouse's name appears on the deed and even if the other spouse has never lived in the house.
• Sole and separate property of a married person. Escrow will almost always require a disclaimer deed from the non-owning spouse anyway. Plan for it.
• Revocable living trust. The seller is the trustee acting in that capacity, not the individual. The correct form is "Jane A. Smith, Trustee of the Smith Family Trust dated June 1, 2019." Escrow will require a certification of trust.
• LLC. The seller is the LLC, signed by a member or manager with authority. Escrow will require the Operating Agreement, a resolution or consent authorizing the sale, and confirmation the LLC is in good standing with the Arizona Corporation Commission.
• Deceased owner. The seller is the personal representative or the successor trustee, and the authority documents must exist before the contract is signed.

3. The Legal Description, Not Just the Street Address

A street address identifies a mailbox. It does not identify a parcel. The contract should carry the recorded legal description, or the lot, block, and subdivision plat reference, plus the assessor's parcel number. If the property includes an adjacent lot, a shared driveway easement, water rights, or a parcel that was split from a larger tract, describing it loosely is how sellers accidentally agree to convey more or less than they own.

4. Purchase Price and Exactly How It Is Paid

Break the price into its components: earnest money, additional deposits, the down payment, new loan amount, any seller carryback, and cash due at closing. The contract should say the balance is payable in cash or immediately available funds at closing, which prevents an argument about a personal check or a promised wire that never arrives.

5. Earnest Money: Amount, Custodian, and When It Becomes Nonrefundable

Earnest money is only meaningful if two things are true: it is enough to hurt, and the contract says clearly when the buyer stops being able to get it back. A $1,000 deposit on a $700,000 house does not motivate anyone. Specify the amount, that it is deposited with the escrow company (never with you personally and never with the buyer's agent), the deadline for deposit, and the precise events after which it is released to you.

 

Say what happens on default. Arizona courts enforce a liquidated damages clause when the amount is a reasonable forecast of harm and actual damages are difficult to estimate; they will not enforce a penalty. Forfeiture of a normal earnest money deposit is generally defensible. A clause that lets you keep the deposit and also sue for full damages tends not to be.

6. The Financing Contingency

This clause decides who bears the risk that the buyer's loan does not fund. From your side, it must state the loan type, the maximum interest rate and points the buyer will accept, the deadline to apply, the deadline to deliver a lender's written loan status update, and, most importantly, a hard outside date after which the contingency expires whether or not the loan is approved.

 

An open-ended financing contingency is a free option for the buyer. Your house sits off the market for two months, the buyer walks, and you start over in a worse season.

7. The Appraisal Contingency

Separate from financing. If the appraisal comes in low, the contract must say what happens: the buyer brings the difference in cash, the price is reduced, the parties renegotiate, or the buyer may cancel. Silence on this point means a low appraisal kills your deal by default. In a market with rapid price movement, a buyer who waives the appraisal contingency in writing is worth real money to you.

8. The Inspection Period and the Buyer's Right to Cancel

The inspection period is the buyer's due diligence window. Define it precisely:

• How many days, and whether they are calendar days or business days.
• When the clock starts, which should be contract acceptance, not the date the buyer gets around to scheduling.
• What the buyer may inspect, including physical inspection, pest, roof, sewer scope, pool, HVAC, permits, HOA documents, insurance history, and title.
• Whether the buyer may cancel for any reason or must state a reason.
• What happens to the earnest money if the buyer cancels within the period.
• The buyer's obligation to restore the property if an invasive inspection damages it, and to carry liability insurance for anyone the buyer sends onto your property.

Set the period at ten days if you can. Fifteen is common. Thirty is a buyer holding an option on your house.

9. Repairs, or Selling As-Is

Decide up front and say it plainly. "As-is" in Arizona means you will not repair; it does not mean you need not disclose. Nothing in an as-is clause relieves you of the disclosure duties described later in this article, and a court will not read one that way.

 

If you agree to repairs, the contract should require licensed contractors, permits where required, completion before a stated date, and delivery of invoices and warranties at closing. A repair credit at closing is usually cleaner for a seller than performing repairs under deadline pressure, but note that lenders limit seller credits, so check with the buyer's lender before agreeing to one.

10. What Conveys and What Does Not

The default rule is that fixtures convey and personal property does not, and the boundary is genuinely unclear for the items people fight about. Put them in the contract by name:

• Refrigerator, washer, dryer, freezer, wine refrigerator
• Wall-mounted televisions and their mounts
• Window coverings, shutters, and rods
• Light fixtures and ceiling fans, especially a chandelier you intend to take
• Pool equipment, robotic cleaners, and spa covers
• Water softener and reverse osmosis system, and whether either is leased
• Security cameras, doorbell cameras, smart thermostats, and smart locks
• Storage sheds, playsets, above-ground spas, and potted landscaping
• Garage door openers, remotes, mailbox keys, and gate transponders
• Solar panels, and whether they are owned, financed, or leased

If you intend to take an item, say so in the contract, and physically remove and replace it before you list if you can. A chandelier dispute at the walkthrough has killed more closings than most people would believe.

11. Title, Escrow, and the Owner's Title Policy

The contract should name the escrow and title company, say who pays for what, and set deadlines for delivery of the title commitment and for the buyer's objection to title exceptions. In most Arizona residential transactions the seller pays for the owner's standard title insurance policy and escrow fees are split, but every term is negotiable and local custom varies by county.

 

Critically, the contract must give the buyer a defined window to review the title commitment and Schedule B exceptions and to object, and must say what happens if the buyer objects: you cure, you decline to cure, or the buyer cancels. Without that structure, a title objection arriving three days before closing has no resolution path.

12. The Deed You Will Sign

Arizona recognizes several deed forms and they are not interchangeable:

General warranty deed

You warrant title against all defects arising at any time, including before you owned the property. Broadest promise, most exposure.

Special warranty deed

You warrant only against defects arising during your ownership. This is the deed most Arizona sellers should sign, and it is the deed KEYTLaw prepares in its for sale by owner package.

Quitclaim deed

You convey whatever interest you have, with no warranty at all. Fine between family members or to fix a vesting error, but buyers and lenders will usually refuse it in an arm's-length sale, and it can complicate the buyer's title insurance.

Name the deed form in the contract. A buyer who assumes a general warranty deed and receives a quitclaim at closing has a legitimate complaint.

13. Closing Date, Possession, and Any Rent-Back

Closing and possession are two different events and the contract must address both. In Arizona, "close of escrow" ordinarily means the date the deed is recorded, not the date documents are signed. Possession usually transfers at recording, but if you need to stay after closing, that is a written rent-back agreement with a daily rate, a security deposit, an insurance allocation, and a hard move-out date, not a friendly understanding.

 

Beware of letting a buyer take early possession before closing. An early-possession buyer who then fails to close is a tenant you must evict, and you will be evicting someone who is living in the house you still own and still insure.

14. Prorations and Allocation of Closing Costs

Say who pays each item. The list that matters in Arizona:

• Property taxes, prorated to the closing date. Arizona property taxes are billed in two installments, with the first half due October 1 and the second half due the following March 1, so the proration math depends on the closing date and the tax year.
• HOA regular assessments, prorated, plus HOA transfer, disclosure, and capital contribution fees.
• Escrow fee, typically split.
• Owner's title insurance policy, typically seller-paid. The lender's policy is typically buyer-paid.
• Recording fees and the courier or wire fees.
• Home warranty, if you agree to buy one.
• Termite or wood-destroying organism inspection, if the buyer's loan requires it.
• Any buyer's broker compensation you agree to pay.

15. Risk of Loss Before Closing

Arizona has not adopted a statute allocating the risk of casualty loss between contract signing and closing, which means the answer comes from your contract or, if the contract is silent, from litigation over equitable conversion. Say who bears the risk if the house burns, floods, or is damaged in a monsoon storm before recording, whether insurance proceeds go to the buyer or to you, and above what damage threshold either party may cancel. Keep your homeowner's insurance in force until the deed records, not until you move out.

16. Default, Remedies, and Dispute Resolution

The contract must say what constitutes a default, how much notice and cure time the defaulting party gets, and what the non-defaulting party may do. Buyer remedies typically include return of the earnest money and, if you have drafted carelessly, specific performance, meaning a court order forcing you to sell. Seller remedies typically include retention of the earnest money as liquidated damages.

 

Consider whether you want a mediation requirement before litigation, and whether you want binding arbitration. Address attorney's fees expressly. Under A.R.S. Section 12-341.01, an Arizona court may award reasonable attorney's fees to the successful party in a contested action arising out of a contract, and a well-drafted contract can strengthen that entitlement.

17. Time Is of the Essence, Notices, and Counting Days

Include a time-is-of-the-essence clause so deadlines are enforceable rather than aspirational. Define how notices are delivered, including email addresses, and when delivery is deemed effective. Define whether "days" means calendar days and what happens when a deadline falls on a weekend or legal holiday. These clauses look like boilerplate and become the whole case when a deal goes bad.

18. Buyer's Broker Compensation

Many buyers are represented, and since the industry-wide changes to broker compensation practices that took effect in August 2024, buyer-broker compensation is negotiated separately from any listing agreement rather than being published in the MLS. As an unrepresented seller you have three choices: refuse to pay a buyer's agent, agree to pay a stated amount or percentage in a separate written compensation agreement, or let the buyer pay their own agent.

 

Whatever you choose, put it in writing before you let an agent bring a buyer through the door, keep it out of the purchase contract if you can, and never sign a document an agent hands you at your kitchen table without reading every line. A one-time showing agreement is a compensation contract.

Arizona Disclosure Law: The Biggest For Sale by Owner Landmine

More unrepresented sellers get sued over disclosure than over anything else in the contract. The reason is that Arizona's core disclosure duty is not written in a statute you can look up and check off. It comes from case law, and it is broader than most sellers assume.

The Common Law Duty: Hill v. Jones

In Hill v. Jones, 151 Ariz. 81, 725 P.2d 1115 (App. 1986), an Arizona appellate court held that a seller of residential property has a duty to disclose facts materially affecting the value of the property that are known to the seller and not reasonably discoverable by the buyer. The sellers in that case knew about prior termite damage and did not volunteer it. That silence was actionable.

 

The rule that follows is simple to state and uncomfortable to apply: if you know it, it is material, and the buyer cannot reasonably discover it, you must disclose it. Selling as-is does not change this. A disclaimer in your contract does not change this. Not being asked does not change this.

 

Things sellers commonly know and wrongly stay quiet about:

• Roof leaks that were patched rather than repaired
• Prior flooding, drainage problems, or water intrusion in a basement or garage
• Foundation cracks, soil movement, or heaving, which matter in parts of the Phoenix and Tucson metro areas built on expansive clay or over fissures
• Prior termite treatment and damage
• Mold remediation, and any moisture source that has not been fixed
• Work done without permits, or permits that were pulled and never finaled
• Additions, casitas, or converted garages that do not comply with zoning or setback rules
• Boundary disputes, encroaching fences or walls, and unrecorded easements the neighbors rely on
• Pending or threatened HOA violations and fines
• Litigation involving the property or the association
• Insurance claims history, which the buyer's insurer will see in the CLUE report anyway
• Recurring pests, scorpions in unusual numbers, packrats, or bee colonies in walls
• Well problems, shared well agreements, and hauled-water arrangements
• Septic system failures and prior repairs
• Noise, odor, or dust from an adjacent use that is not obvious on a Sunday afternoon showing

The Seller's Property Disclosure Statement

Arizona has no statute requiring a residential seller to complete a standard disclosure form. The Seller's Property Disclosure Statement, known as the SPDS, is an Arizona REALTORS® form, not a legal mandate. Nevertheless, completing a comprehensive written disclosure statement is strongly in your interest for one reason: it converts a "he said, she said" argument into a signed document showing exactly what you told the buyer and when. A seller who discloses in writing and gets the buyer's signed acknowledgment is in a far better position two years later than a seller who disclosed verbally.

 

Complete it yourself. Answer every question. Write "unknown" only when it is true, and never write "unknown" about something you actually know. Attach receipts, warranties, permits, and inspection reports. Then have the buyer sign and date it, and keep a copy for at least the applicable statute of limitations period.

Federal Lead-Based Paint Disclosure: Homes Built Before 1978

This one is federal, mandatory, and carries teeth. Under 42 U.S.C. Section 4852d and the implementing EPA and HUD regulations, the seller of "target housing," meaning most residential housing built before 1978, must:

• Disclose the presence of any known lead-based paint and lead-based paint hazards
• Provide the buyer with any available records and reports
• Give the buyer the EPA pamphlet Protect Your Family From Lead in Your Home
• Give the buyer a 10-day period to conduct a lead risk assessment or inspection, unless the parties agree in writing to a different period
• Include the required disclosure and acknowledgment language in the contract, signed by both parties

The penalty for a knowing violation includes treble damages to the buyer plus civil penalties. Retain the signed disclosure for at least three years.

Swimming Pool Safety Notice

A.R.S. Section 36-1681 requires that a person who sells, leases, or rents a dwelling with a contained body of water give the buyer, lessee, or renter a notice explaining pool safety education and the responsibilities of pool ownership, in the form approved by the Arizona Department of Health Services. The same statute sets Arizona's pool barrier requirements, including a barrier at least five feet high with no opening through which a four-inch sphere can pass, and gates that are self-closing and self-latching and open outward from the pool. If your barrier or gate does not comply, expect the buyer's inspector to find it and expect to pay for the fix.

Septic Systems and Onsite Wastewater Facilities

If the home is on a septic system rather than a municipal sewer, Arizona Department of Environmental Quality rules impose real obligations on both sides of the sale, and unrepresented sellers miss them constantly:

• The seller must have the system inspected by a qualified inspector, and the inspection must occur within six months before the transfer.
• The seller must give the buyer the Report of Inspection along with the permitting, operation, and maintenance records for the system. The report is not filed with ADEQ; it is the seller-to-buyer communication about the system's condition.
• The buyer must file a Notice of Transfer and pay the fee within 15 calendar days after the transfer closes.

Build the inspection into your timeline before you accept an offer. Discovering a failed leach field two weeks before closing is a five-figure problem negotiated under maximum pressure.

Rural Land: The Affidavit of Disclosure

If you are selling unsubdivided land, or a home on land that was split from a larger parcel, in an unincorporated area of an Arizona county, A.R.S. Section 33-422 applies. A seller of five or fewer parcels of land, other than subdivided land, in an unincorporated area must complete and furnish the buyer a statutory Affidavit of Disclosure covering legal access, road maintenance, utilities, water supply, wastewater, flood zone, and similar issues.

 

The mechanics matter:

• The affidavit must be furnished at least seven days before the transfer of the property.
• The buyer must acknowledge receipt.
• The buyer has the right to rescind the transaction for five days after the affidavit is furnished.
• The seller must record the executed affidavit at the same time the deed is recorded.

Miss this and you have handed your buyer a rescission right that survives well past the point where you have made plans around the sale proceeds.

What You Are Not Required to Disclose

A.R.S. Section 32-2156 protects sellers from claims based on failing to disclose that the property is or has been the site of a natural death, suicide, homicide, or any felony crime; that a prior occupant had a disease not transmitted through occupancy of the property; or that the property is located near a registered sex offender. The statute also provides that failing to disclose these facts is not grounds for termination or rescission.

 

Two cautions. First, this shields silence, not lies. If a buyer asks a direct question, you cannot answer falsely. Second, physical damage from an event is still a physical condition, and a methamphetamine contamination issue is a health hazard, not a stigma, so those remain disclosable.

Solar Panels, Leases, and Liens on Equipment

Leased or financed solar is one of the most common late-stage deal killers in Arizona. Before you list, pull the solar contract and find out whether it is an outright purchase, a lease, a power purchase agreement, or a loan secured by a UCC fixture filing against your property. Then find out the solar company's transfer process, the buyer credit qualification requirements, the transfer fee, and how long it takes, because it is often three to six weeks. The same analysis applies to leased water softeners, leased security systems, and any PACE-style assessment attached to the property.

HOA and Condominium Resale Disclosures

If your home is in a planned community or a condominium, Arizona statute puts the resale disclosure obligation on you, the seller, and gives your buyer a damages claim if you miss it.

Planned Communities

Under A.R.S. Section 33-1806, a member selling a home in a planned community must furnish the buyer, within ten days after receipt of written notice of a pending sale, the following:

• A copy of the bylaws and the rules of the association
• A copy of the declaration of covenants, conditions, and restrictions
• A dated statement containing the association's contact information, the amount of the common regular assessment and any unpaid amounts owed on the property, insurance coverage information, whether any alteration or improvement violates the declaration, whether the association has notice of any pending violation, and the amount of any reserves
• A copy of the association's current operating budget
• A copy of the most recent annual financial report, or a summary if the report exceeds ten pages
• A copy of the most recent reserve study, if any
• A summary of any pending lawsuit in which the association is a party

The association may charge a resale disclosure fee of not more than $400 in the aggregate, a rush fee of not more than $100 if the documents are required within 72 hours, and an update fee of not more than $50 if 30 days or more have passed since the original statement. Those fees may be collected no earlier than the close of escrow and may be charged only once per transaction.

Condominiums

A.R.S. Section 33-1260 imposes a substantially parallel obligation on the seller of a condominium unit, with the same ten-day window and the same document list. For associations with 50 or more units, the association delivers the materials; for smaller associations, the seller does. A purchaser or seller damaged by a failure to comply may pursue all remedies at law or in equity, including recovery of reasonable attorney's fees.

Title, Escrow, the Deed, and Closing Mechanics

Opening Escrow

Escrow is a neutral third party holding funds and documents and disbursing them when every condition is met. In Arizona, the escrow company is usually also the title insurer. As the seller you may propose the escrow company, and there is a real benefit to using one you have worked with or that your attorney knows, because a responsive escrow officer prevents a great deal of pain.

 

Understand the relationship between two sets of paper. Your purchase contract governs the deal. The escrow instructions govern what escrow does. They must be consistent, and where they conflict, the resulting mess is expensive. Read the escrow instructions before you sign them and make sure they match your contract.

The Title Commitment and Schedule B

Escrow will order a title commitment showing what the title insurer will insure and, in Schedule B, what it will not. Read Schedule B yourself. This is where you learn about the easement across your back lot line, the CC&Rs, the mineral reservation, the old judgment lien in a similar name, the mechanic's lien from a contractor you thought you paid, and the deed of trust you refinanced away in 2019 that was never released.

 

Every one of those has to be cleared or accepted before you can close. Some clear in a day and some take a month. Order the title commitment early.

Paying Off Your Loan

Escrow will order a payoff demand from your lender. Two points that catch sellers: the payoff figure includes per-diem interest, so a delayed closing changes the number, and the release or reconveyance of the deed of trust is recorded after closing, sometimes weeks after. Also check for a home equity line of credit, because an unfrozen line can be drawn against after the payoff demand is issued.

Signing and Recording the Deed

Under A.R.S. Section 33-401, a conveyance of real property must be in writing, subscribed and delivered by the party conveying it, and acknowledged before a notary or other authorized officer. Every person in the vesting must sign, including a spouse whose name is not on the deed but whose community property interest exists by operation of law.

 

Out-of-state sellers can sign before any notary in any state. Arizona also authorizes remote online notarization, which is worth arranging in advance if you are overseas, along with the possibility of signing at a United States embassy or consulate.

The Affidavit of Property Value

A.R.S. Section 11-1133 requires that each deed evidencing a transfer of title have an Affidavit of Property Value, sometimes called the affidavit of legal value, appended at the time of recording, in the form approved by the Arizona Department of Revenue. It is signed jointly by the seller and buyer or their agents and certifies the sale price, financing type, personal property value, parcel number, property use, and related facts. The county recorder must refuse to record a deed without it unless the deed bears a notation of an exemption under A.R.S. Section 11-1134.

 

Exempt transfers, such as a deed into your own revocable trust or a deed correcting a prior instrument, use the exemption notation instead. A normal arm's-length sale is not exempt.

Closing Day

Closing in Arizona is not a table where everyone sits down together. You sign in advance, the buyer signs, the lender funds, escrow balances, and the deed is recorded with the county recorder. Close of escrow is recording. Wire your proceeds instructions to escrow well ahead of time, and verify them.

Taxes: Capital Gains, Prorations, FIRPTA, and Form 1099-S

Nothing in this section is tax advice for your situation. Talk to your CPA before you sign, not after you close.

The Home Sale Exclusion

Internal Revenue Code Section 121 lets an individual exclude up to $250,000 of gain from the sale of a principal residence, and a married couple filing jointly up to $500,000, if you owned and used the home as your principal residence for at least two of the five years before the sale and have not used the exclusion on another sale within the prior two years. Partial exclusions are available for certain sales caused by a change in employment, health, or unforeseen circumstances.

 

Your gain is the sale price minus selling costs minus your adjusted basis, and your basis includes capital improvements. This is the argument for keeping every receipt for the remodel, the new roof, the pool, and the addition. Sellers who kept nothing routinely overpay.

If the Home Was Ever a Rental

Depreciation you took, or were allowed to take, while the property was a rental is recaptured on sale and taxed at up to 25 percent under the unrecaptured Section 1250 gain rules, and the Section 121 exclusion does not shelter it. Periods of non-qualified use also reduce the exclusion. If the property is investment property rather than a residence, ask your CPA about a Section 1031 exchange before you sign a contract, because the exchange must be set up before closing, not after.

Form 1099-S

The escrow or title company generally reports the sale to the IRS on Form 1099-S under IRC Section 6045(e). For a principal residence sale that qualifies for full exclusion and meets the dollar thresholds, escrow may accept a written certification and skip the filing. Either way, if a 1099-S is issued, the IRS has the gross proceeds figure and expects to see the sale on your return.

FIRPTA: Selling While a Foreign Person

Under the Foreign Investment in Real Property Tax Act, IRC Section 1445, a buyer purchasing a U.S. real property interest from a foreign person must withhold 15 percent of the amount realized and remit it to the IRS. The buyer, not the seller, is the withholding agent and is personally liable if withholding is required and not done, which is why buyers and escrow officers insist on documentation.

• A U.S. seller avoids withholding by signing a certification of non-foreign status, sometimes called a FIRPTA affidavit, under penalty of perjury with a taxpayer identification number.
• No withholding is required if the amount realized is $300,000 or less and the buyer acquires the property for use as a residence.
• A reduced 10 percent rate applies in the band above $300,000 and up to $1,000,000 when the buyer will use the property as a residence.
• A foreign seller whose actual tax liability is less than the withholding may apply to the IRS for a withholding certificate, but that application takes time and must be filed no later than the date of transfer.

Arizona imposes no separate state withholding on nonresident sellers, unlike California and several other states.

Property Taxes and the Proration

Arizona property taxes are billed in two installments. The first half of the year's tax is due October 1 and becomes delinquent after November 1; the second half is due the following March 1 and becomes delinquent after May 1. Escrow prorates the current year's taxes to the closing date and adjusts on the settlement statement. If you are closing in a month when an installment is due, confirm on the settlement statement who is actually paying it, so the county is not chasing either of you in December.

Seller Financing: Proceed With Extreme Caution

Sooner or later a buyer will propose that you carry back part of the purchase price. It sounds attractive, especially when it converts a hard-to-finance buyer into a closed sale at your asking price. It is also the fastest way for an ordinary homeowner to become an unlicensed residential mortgage lender.

The Federal Problem

The Dodd-Frank Act and the Consumer Financial Protection Bureau's rules brought seller-financed residential mortgages inside the definition of a "loan originator." Regulation Z, 12 C.F.R. Section 1026.36(a), provides narrow exclusions:

• The one-property exclusion. A natural person, estate, or trust that finances the sale of a single property it owns in any 12-month period, did not construct the home, and whose financing carries a fixed rate or a rate that adjusts only after five years subject to reasonable annual and lifetime caps. A balloon payment is not prohibited under this exclusion.
• The three-property exclusion. A seller financing up to three properties in any 12-month period, subject to additional conditions including a determination in good faith that the buyer has a reasonable ability to repay, and, critically, no balloon payment and a fixed or narrowly adjustable rate.

Fall outside an exclusion and you are an unlicensed loan originator, subject to the federal ability-to-repay rules under 15 U.S.C. Section 1639c, and your borrower may have defenses to enforcement of the very note you are relying on. Layer on Arizona's own mortgage licensing statutes and the analysis gets harder, not easier.

The Arizona Problem

Arizona's anti-deficiency statutes protect the borrower and hurt the carryback seller. Under A.R.S. Section 33-814(G), if you sell under a deed of trust secured by property of two and one-half acres or less that is limited to and utilized for a single one-family or single two-family dwelling, and the trustee sells the property at a trustee's sale, no deficiency judgment is available, no matter how far short the sale proceeds fall. A.R.S. Section 33-729 applies a parallel rule to purchase money mortgages.

 

Translated: if your buyer stops paying, your remedy is to take the house back and absorb the loss, including whatever the buyer did to the house on the way out.

Other Landmines

• Your existing mortgage. Nearly every deed of trust contains a due-on-sale clause, and the Garn-St Germain Act, 12 U.S.C. Section 1701j-3, preempts state laws restricting enforcement, with limited exceptions that do not cover an ordinary sale. Selling on a wraparound note while your loan stays in place can trigger acceleration of your loan.
• Agreements for sale. Arizona's contract-for-deed device carries its own forfeiture statutes and timelines and is not a shortcut around any of the above.
• Tax treatment. An installment sale under IRC Section 453 changes when you recognize gain and interacts with the Section 121 exclusion in ways your CPA needs to model before you agree to terms.

Special Situations: Trusts, LLCs, Probate, Divorce, and Tenants

The Home Is Titled in Your Revocable Living Trust

Good. That is what the trust is for. The seller is the trustee acting as trustee, the contract and deed are signed in that capacity, and escrow will require a certification of trust identifying the trust, the current trustee, and the trustee's authority to sell. If the original trustee has died or resigned, gather the successor trustee documentation before you list, not after you have a contract.

The Home Is Titled in an LLC

The LLC is the seller. Escrow will want the Operating Agreement, evidence the signer is a member or manager with authority, a written consent or resolution approving the sale, and confirmation that the LLC is in good standing with the Arizona Corporation Commission. If the LLC is administratively dissolved, fix that before you sign a contract. Note also that an LLC does not get the Section 121 principal residence exclusion unless it is a disregarded entity and the other requirements are met, so ask your CPA.

The Owner Has Died

If the home was in a trust, the successor trustee sells. If it was in an LLC, the members' or the operating agreement's succession provisions control. If the home was owned outright in the decedent's individual name, someone must be appointed personal representative through probate before the property can be sold, and a personal representative's deed is used. Small estate affidavit procedures exist for real property in Arizona but have dollar limits and a waiting period. Sort out authority first; a contract signed by someone without authority to sell is a problem you cannot paper over at closing.

Divorce

Both spouses must sign, community property joinder applies, and the decree or a court order may control the price, the timing, and the split of proceeds. Escrow will follow the recorded documents and the parties' written instructions, not a spouse's description of what the judge said.

A Tenant Is Living in the House

The lease survives the sale. A buyer who wants a vacant house at closing is asking you to deliver something you may not have the right to deliver. Address it in the contract: is the buyer taking subject to the lease, is the security deposit being transferred, and, if you are agreeing to deliver the house vacant, do you actually have a lawful way to do that by the closing date? Under the Arizona Residential Landlord and Tenant Act you cannot terminate a fixed-term lease because you sold the house.

The Twelve Most Expensive For Sale by Owner Mistakes

1. Signing the buyer's contract without reading every word. The contract you did not write was written to protect someone else.
2. Taking earnest money personally. It belongs in escrow. Holding a buyer's deposit in your own account creates problems you do not want.
3. Letting the buyer occupy before closing. If the deal dies, you have a tenant and an eviction, not a buyer and a cancellation.
4. An open-ended financing contingency. Your house becomes a free option for a buyer who may never qualify.
5. A 30-day inspection period. Ten to fifteen days is plenty. Longer is an option contract in disguise.
6. Disclosing verbally instead of in writing. Two years later, only the paper exists.
7. Assuming "as-is" cures a disclosure problem. It does not, and no Arizona court will read it that way.
8. Ordering the HOA package late. Ten statutory days plus a violation you did not know about equals a blown closing date.
9. Forgetting the non-titled spouse. Community property joinder is not optional and escrow will stop the closing.
10. Ignoring a leased solar system. Transfer approval can take a month and the buyer has to qualify.
11. Skipping the septic transfer inspection. It must occur within six months before transfer, and a failure discovered late is a five-figure negotiation you will lose.
12. Accepting wire instructions by email. Verify by phone at an independently obtained number, every time, no exceptions.

A Realistic Arizona For Sale by Owner Timeline

When	What Happens
Before listing	Pull your deed and confirm exact vesting. Locate your trust or LLC documents. Order the HOA resale package if you know your buyer pool. Get the solar, water softener, and security system contracts out. Gather permits, warranties, and improvement receipts. Draft your written disclosure statement.
Listing	Photographs, pricing from real comparable sales, flat-fee MLS if you want one, signage, and a plan for showings and buyer screening.
Offer received	Verify the preapproval with the lender. Confirm the source and location of the down payment. Do not sign anything yet.
Contract	Have your attorney prepare or review the purchase contract before you sign. Negotiate the inspection period, financing deadline, appraisal risk, and what conveys.
Days 1–3	Open escrow. Deliver earnest money to escrow. Order the title commitment. Give the buyer the disclosure package, the lead paint disclosure if pre-1978, and the pool notice if applicable. Request the HOA resale documents in writing.
Days 1–10	Buyer's inspections. Septic transfer inspection if applicable. Review the title commitment and Schedule B yourself.
Days 10–15	Inspection response and repair negotiation. HOA documents delivered. Appraisal ordered.
Days 15–30	Appraisal received and any value gap resolved. Loan conditions cleared. Solar or equipment lease transfer processed. Payoff demand ordered.
Days 30–40	Settlement statement reviewed line by line. Deed and affidavit of property value signed and notarized. Final walkthrough. Utilities scheduled for transfer.
Closing	Lender funds, escrow balances, deed records. Recording is closing. Keys transfer. Proceeds wire out to an account you verified by phone.
After closing	Buyer files the septic Notice of Transfer within 15 days if applicable. Confirm the release of your deed of trust records. Keep the entire file, including the signed disclosures.

How KEYTLaw Prepares Your For Sale by Owner Contract

KEYTLaw's For Sale by Owner Contract Preparation Service exists for exactly the situation this article describes: an Arizona buyer or seller doing a residential transaction without a real estate agent who needs the legal documents done correctly and drafted to favor the client rather than split the difference.

What You Get

For a flat fee of $2,497, the firm prepares four custom documents for your transaction:

• A Residential Purchase and Sale Agreement, drafted to favor you, not written as a neutral form, and structured to close through a local escrow company with title insurance
• A Special Warranty Deed, the deed form that limits your warranty to your own period of ownership
• A Foreign Investment in Real Property Act Affidavit, the FIRPTA certification escrow will require
• An Affidavit of Legal Value, the affidavit the county recorder requires under A.R.S. Section 11-1133 before it will record the deed

Options

• $297 for expedited preparation within two business days, instead of the standard one week
• $375 for buyers who want the firm to review the title insurance commitment and correspond with the seller about title issues

How to Hire the Firm

There are two steps, and both are required:

1. Complete and submit the legal engagement agreement on the For Sale by Owner Contract Preparation Service page, and pay the fee in advance.
2. Complete and submit the Arizona Home Purchase & Sale Questionnaire, which collects everything needed to draft the documents: the exact legal names and marital status of the buyer and seller, whether either party is an individual, a trust, an LLC, or a corporation, the property address and description, whether there is a pool, an HOA, or a septic system, whether the home was built before 1978, what appliances and personal property are included or excluded, the purchase price, earnest money, closing date, loan and appraisal contingencies, inspection period, escrow company preference, and home warranty terms.

Frequently Asked Questions

Is it legal to sell my home in Arizona without a real estate agent?

Yes. A.R.S. Section 32-2121(A)(1) exempts an owner selling the owner's own property from Arizona's real estate licensing requirements. You may sell your own home, your trust's home, or your LLC's home without a license and without an agent.

Can I just use the standard Arizona purchase contract?

Not lawfully, in most cases. The Residential Resale Real Estate Purchase Contract is a copyrighted Arizona REALTORS® form licensed to association members. It is not a public form. Article 26, Section 1 of the Arizona Constitution gives licensed brokers and salespeople the right to fill out real estate instruments, but that right belongs to the licensee. Without one in your deal, your lawful options are to draft the contract yourself or to hire an Arizona attorney.

Will the title or escrow company write my contract?

No. Escrow is a neutral stakeholder. It will prepare escrow instructions, the settlement statement, and often the deed, but it will not draft your purchase contract and will not advise you on whether the terms are good for you.

Does an oral agreement to sell my house count?

No. A.R.S. Section 44-101, Arizona's statute of frauds, makes an agreement for the sale of real property unenforceable unless it is in writing and signed by the party to be charged.

Are electronic signatures valid on an Arizona real estate contract?

Yes. The Arizona Electronic Transactions Act, A.R.S. Section 44-7001 and following, makes electronic signatures enforceable. The deed is different: it must be signed, notarized, and recorded.

My spouse is not on the deed. Does my spouse still have to sign?

Almost certainly yes. Arizona is a community property state and A.R.S. Section 25-214(C) requires both spouses to join in any transaction disposing of an interest in community real property. Escrow will generally require the non-titled spouse to sign the deed or a disclaimer deed regardless.

How much earnest money should I require?

Enough that walking away costs the buyer something real. One percent of the purchase price is a common floor and more is better. Just as important as the amount is a contract that says clearly when the deposit stops being refundable.

How long should the inspection period be?

Ten days is reasonable and fifteen is common. Anything approaching thirty days gives the buyer a free option on your house while you are off the market.

Does selling "as-is" mean I do not have to disclose problems?

No. As-is means you will not repair. It does not eliminate your duty under Arizona law to disclose known material facts affecting value that the buyer cannot reasonably discover. No Arizona court reads an as-is clause as a license to conceal.

What exactly must I disclose to a buyer in Arizona?

Under Hill v. Jones, 151 Ariz. 81, 725 P.2d 1115 (App. 1986), you must disclose facts you know that materially affect the value of the property and that are not reasonably discoverable by the buyer. In practice that includes roof leaks, water intrusion, foundation movement, termite history, mold, unpermitted work, boundary and easement problems, HOA violations, septic and well issues, and litigation involving the property.

Am I required by law to fill out a Seller's Property Disclosure Statement?

No Arizona statute requires it. The SPDS is an Arizona REALTORS® form. But completing a thorough written disclosure and getting the buyer's signed acknowledgment is the single best protection you have against a later claim, so do it anyway.

Do I have to tell a buyer someone died in the house?

No. A.R.S. Section 32-2156 provides that no criminal, civil, or administrative action may be brought against a seller for failing to disclose that the property was the site of a natural death, suicide, homicide, or any felony, that a prior occupant had a disease not transmitted by occupancy, or that the property is near a registered sex offender. You may not lie if asked directly, and physical damage or contamination is still disclosable.

My house was built before 1978. What do I have to do?

Federal law, 42 U.S.C. Section 4852d, requires you to disclose known lead-based paint and hazards, provide any related records and reports, give the buyer the EPA pamphlet, allow a 10-day period for a lead inspection unless the parties agree otherwise in writing, and include the signed disclosure language in the contract. Knowing violations expose you to treble damages.

What do I have to do if the house has a pool?

A.R.S. Section 36-1681 requires the seller of a dwelling with a contained body of water to give the buyer a pool safety notice approved by the Arizona Department of Health Services. The same statute sets the barrier requirements, including a five-foot barrier with no opening a four-inch sphere can pass through and self-closing, self-latching gates that open outward from the pool.

The house is on a septic system. What is required?

The seller must have the onsite wastewater system inspected within six months before the transfer and must give the buyer the Report of Inspection along with the system's permitting and maintenance records. The buyer must file a Notice of Transfer with the applicable authority and pay the fee within 15 calendar days after closing. Schedule the inspection early.

What is the Affidavit of Disclosure and does it apply to me?

A.R.S. Section 33-422 applies to a seller of five or fewer parcels of land, other than subdivided land, in an unincorporated area of an Arizona county. You must furnish the statutory Affidavit of Disclosure at least seven days before transfer, the buyer may rescind the sale for five days after receiving it, and you must record the executed affidavit at the same time the deed is recorded.

What do I have to give the buyer if my home is in an HOA?

Under A.R.S. Section 33-1806 for planned communities and A.R.S. Section 33-1260 for condominiums, the seller must furnish the buyer, within ten days of written notice of the pending sale, the declaration, bylaws and rules, a dated statement of assessments and violations, the current operating budget, the most recent annual financial report, the most recent reserve study if any, and a summary of pending litigation. The association may charge a resale disclosure fee of up to $400, a rush fee of up to $100, and an update fee of up to $50, all collected no earlier than close of escrow.

What kind of deed should I sign?

Most Arizona sellers should sign a special warranty deed, which warrants title only against defects arising during your ownership. A general warranty deed warrants against defects from any period, including before you owned the property. A quitclaim deed gives the buyer no warranty at all and buyers and lenders usually refuse it in an arm's-length sale.

What is the Affidavit of Property Value and who signs it?

A.R.S. Section 11-1133 requires an Affidavit of Property Value, in the form approved by the Arizona Department of Revenue, to be appended to the deed at recording. It is signed jointly by the seller and buyer or their agents. The county recorder must refuse to record the deed without it unless an exemption under A.R.S. Section 11-1134 is noted on the instrument.

Does Arizona have a real estate transfer tax?

No. Article 9, Section 24 of the Arizona Constitution prohibits the state and any county, city, or other political subdivision from imposing a new tax on the sale or transfer of real property. You will still pay a flat recording fee.

Who pays for what at closing in an Arizona for sale by owner deal?

Everything is negotiable and the contract controls. Common Arizona practice is that the seller pays for the owner's title insurance policy, escrow fees are split, the buyer pays the lender's title policy and loan costs, and HOA transfer and disclosure fees are allocated by agreement. Property taxes and HOA dues are prorated to the closing date.

Will I owe capital gains tax on the sale?

Possibly not. IRC Section 121 excludes up to $250,000 of gain for an individual and $500,000 for a married couple filing jointly if you owned and used the home as your principal residence for two of the five years before the sale and have not used the exclusion in the prior two years. Gain above the exclusion, and depreciation recapture if the home was ever a rental, is taxable. Talk to your CPA before you sign.

What is FIRPTA and does it affect me?

FIRPTA requires a buyer to withhold 15 percent of the amount realized when purchasing U.S. real property from a foreign person. If you are a U.S. person, you sign a certification of non-foreign status and no withholding occurs. There is no withholding when the price is $300,000 or less and the buyer will use the property as a residence, and a reduced 10 percent rate applies from $300,000 to $1,000,000 for a residence purchase.

The buyer wants me to carry back part of the price. Should I?

Be very careful. Seller financing of a residence implicates the federal loan originator and ability-to-repay rules under Regulation Z, and Arizona's anti-deficiency statute, A.R.S. Section 33-814(G), means that if the buyer defaults on a dwelling on two and one-half acres or less, you take the house back and cannot obtain a deficiency judgment. KEYTLaw does not represent sellers who finance any part of the purchase price.

Can I sell a house that is owned by my living trust?

Yes. The trustee signs the contract and the deed in that capacity, and escrow will require a certification of trust confirming the trust's existence and the trustee's authority to sell. Have the trust documents in hand before you list.

Can I sell a house owned by my LLC?

Yes. The LLC is the seller and a member or manager with authority signs. Escrow will want the Operating Agreement, a written consent or resolution approving the sale, and confirmation the LLC is in good standing with the Arizona Corporation Commission.

The owner died. Can the family just sell the house?

Only if someone has legal authority. If the home was in a trust, the successor trustee sells. If it was in the decedent's individual name, a personal representative must generally be appointed through probate and a personal representative's deed is used. Establish authority before signing a contract.

Do I have to let a buyer's agent bring a buyer, and do I have to pay that agent?

You do not have to do either. Since the industry-wide compensation changes that took effect in August 2024, buyer-broker compensation is negotiated separately. If you agree to pay a buyer's agent, do it in a separate written compensation agreement signed before any showing, and read every word of any document an agent asks you to sign.

How do I avoid wire fraud when my sale proceeds are wired to me?

Never accept wire instructions or a change to wire instructions by email. Call your escrow officer at a phone number you obtained independently, not one contained in the email, and verify the account details verbally before any funds move. Stolen wires are usually unrecoverable.

How long does KEYTLaw take to prepare the documents, and what does it cost?

The flat fee is $2,497 for the purchase and sale agreement, special warranty deed, FIRPTA affidavit, and affidavit of legal value, with standard preparation in about one week. Expedited two-business-day preparation is $297 more. Buyers may add title commitment review and correspondence with the seller for $375. Fees are paid in advance and are nonrefundable. See the current terms at keytlaw.com/azllclaw/fsbo.

What is the fastest way to get started?

Submit the engagement agreement and fee at keytlaw.com/azllclaw/fsbo, then complete the Arizona Home Purchase & Sale Questionnaire. If you would rather talk it through first, call Richard Keyt at 480-664-7478. Book a free office, phone or Zoom video consultation using our online calendar.

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This article is general information about Arizona law and is not legal advice about your transaction. Reading it does not create an attorney-client relationship with KEYTLaw, LLC or with any of its attorneys. Real estate and tax laws change, and the right answer depends on facts specific to your property and your circumstances. Consult an Arizona attorney and your own tax advisor before signing a contract to sell real property. © 2026 KEYTLaw, LLC. All rights reserved.