Sep 24, 2018

Builder's Risk Insurance


What is Builder’s Risk Insurance?

Builder's risk insurance is a type of insurance policy which covers residential and commercial structures while they are under construction or being remodeled, or renovated. Builder's risk insurance is "coverage that protects a person's or organization's insurable interest in materials, fixtures and/or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from a covered cause."

Builder’s risk policies are typically available for three types of construction; ground-up new construction, remodeling and renovation..

What is Covered?

Builder’s risk is intended to protect construction sites from loss due to certain types of damage. The exact coverage and limitations varies between providers and policies but generally builder’s insurance will cover against loss from:
     theft,
     vandalism,
     fire,
     damage to equipment,

Additional coverage can be purchased to include protection from loss due to:
     flood,
     windstorm,
     earthquake,
     mudslides,
     construction materials,
     temporary structures,
     fencing,
     scaffolding,
     and landscaping. 

What is NOT Covered by Builder’s Risk Coverage?

     terrorism,
     acts of war,
     government seizure,
     nuclear hazards,
     Injuries or accidents on the job site,
     damage to materials while they are in transit.

If you are thinking about building a custom home in Arizona and have questions about whether builder’s risk insurance is right for you then call Arizona real estate attorney Clint Dunaway at 480-344-4035 or email at cdunaway@davismiles.com

Sep 11, 2018

Appealing an Arbitrator's Ruling


Received an Unfavorable Ruling from an Arbitrator? What Can be Done?

There are two basic options available you can either appeal the arbitrator’s decision or you can appeal it. If you do not appeal the award then it will  then  become a final judgment. However, if we appeal the arbitration award then your case will continue moving forward in the Superior Court as if the arbitration hearing and arbitrator’s award had never happened.

I.                   LET THE DECISION STAND
A.    Decision Becomes Final- If you do not appeal the arbitrator’s decision within 20 days then that decision will become a judgment against you and in essence the case will be over.

II.                APPEALING THE DECISION
A.    Notice of Appeal- Within 20 days of the Arbitrator’s decision you must file a notice with the Court that states: “Notice from Arbitration and Motion for Trial Setting”. This is extremely important, this is a firm cutoff and we cannot miss this date.

B.     Deposit for Appeal- At the time of filing the notice of appeal of arbitrator's decision, you must deposit with the Clerk $140. If you are ultimately deemed to be the prevailing party then the deposit will be returned to you. However, if you are the losing party then the court will give your deposit to the opposing party.

C.     Downside to Appeal- Downside to Appealing the Arbitrator’s Award:
The case will continue moving forward and with that comes the cost, stress, and time associated with litigating the case. Additionally, as their attorneys’ fees continue to mount it increases your risk exposure if you were to take this case to trial and lose.

Ultimately, the decision whether to appeal the arbitrator’s award can only be made by you. If you are looking for an Arizona attorney to help you appeal an Arizona arbitrator's ruling then call us at 480-344-4035 or email at cdunaway@davismiles.com.

Aug 28, 2018

How to Remove a Wrongfully Recorded Lien?

How Can you Remove an Invalid Lien Recorded Against Your Home?

Occasionally, I am approached by clients who believe someone has recorded an invalid lien against their Property and want to know what they can do to remove it.

A.R.S. 33-420: Discusses the issues of remove groundless or fraudulent liens that have been filed.

A.R.S. 33-420(A): Provides a property owner at least $5000, or treble the actual damages caused by the recording of forged, groundless, misstated, or contains false claims. 

A.R.S. 33-420(C): Provides the property owner $1000, or treble actual damages, whichever is greater, and attorney fees and costs, if he willfully refuses to release or correct such document of record within 20-days from the date of a written request from the owner or beneficial title holder of the real property.

Removing the invalid lien can be someone complex depending upon the unique facts of your situation. So if you believe that a lien have been wrongfully recorded against one of your Arizona properties then contact real estate attorney Clint Dunaway at: 480-344-4035 or email cdunaway@davismiles.com. 


Aug 1, 2018

What is a Deed of Trust?

Arizona Promissory Notes
To fully understand the meaning of the deed of trust, you must first understand the promissory notes.

Arizona homebuyers often think of the deed of trust is the contract they are signing with the lender to borrow money to purchase their home. However, that's actually not the case. It's the promissory note that contains the promise to repay the amount borrowed.

While he promissory note is basically an IOU that contains the promise to repay the loan, the deed of trust is the document that pledges the property as security for the loan. It is the deed of trust that permits a bank to foreclose if you fail to make the monthly payments or breach the loan agreement in some other way.

Deeds of Trust
A deed of trust, pledges real property to secure a loan. In Arizona deeds of trust are used instead of a mortgage.

A deed of trust involves three parties:
  • the trustor, aka, the borrower;
  • the lender, often referred to as the beneficiary in legal documents;
  • and the trustee. The trustee is an independent third-party that holds their poor legal title to the property. The main function of the trustee is to sell the property at public auction if the trustor defaults on payments. Quite often, an Arizona, a real estate lawyer asked as trustee.
Deed of Trust Foreclosure
the judicial foreclosure is the process used with deeds of trust. In a nonjudicial foreclosure, the bank can't foreclose without going to court so long as the deed of trust contains a power of sale clause.

If you are looking for an Arizona real estate lawyer to answer questions you have about a deed of trust, then please call us at 480-344-4035 or email cdunaway@davismiles.com.




Jul 23, 2018

Real Estate Agent's Non-Disclosure of Known Defects

Arizona real estate agents are required to "disclose in writing to all other parties any information the licensee possesses that materially or adversely affects the consideration to be paid by any party to the transaction". A real estate agents failure to disclose a known defect about the property could put their license and jeopardy and expose themselves to financial sanctions.

R4-28-1101 of the Arizona Administrative Code of Professional Conduct: states that real estate agents owe a fiduciary duty to the client and shall protect and promote the client's interest. However, it also states that they are to deal fairly with all parties to the transaction--even the buyer.

What if a Complaint is made to the AZDRE?
If a complaint is made by a party to a real estate purchase that an Arizona real estate agent hid material information from the buyer than a notice will be sent to that real estate agent. The AZDRE will begin a thorough review of the complaint to make a finding of their own. As part of this review process it is highly likely that the AZDRE will ask the real estate agent for all documents pertinent to this situation. For instance, they may ask for all emails, text messages, contracts, addenda to the contract, etc.  

Do Not Simply Ignore the Department's Requests
If you are a real estate agent who has received a request from the AZDRE for documentation do not ignore them! Ignoring the problem will not make it go away. Don't think that by sticking your head in the sand the AZDRE will forget about the alleged violation. In fact, simply ignoring the Department's request for documents can cause you to lose your real estate license AND prevent your from renewing or reapplying for a license!

A.R.S. 32-2153(B)(11): States that "The commissioner may suspend or revoke a license, deny the issuance of a licese, issue a letter of concern to a licensee, issue a provisional license failure "to respond in the course of an investigation or audit by providing documents or written statements."




Don't be this type of an Arizona real estate agent! If you have found yourself in trouble with the Arizona Department of Real Estate then give me a call at 480-344-4035 or email at cdunaway@gmail.com. 

Jul 12, 2018

Recovering Future Rents from Tenant

If a tenant that is under a current lease agreement who is evicted or abandons the property; can that landlord sue for all future rents thru the end of the lease? The answer is; "yes", "no" and "maybe".

Let me answer this question by using an example. Landlord and Tenant sign a 24 month lease agreement. Tenant promises to pay $1,000 each month for rent. However, 6 months into the lease term the tenant does not pay rent and so the landlord evicts him. Tenant still has 18 months left on his 2 year lease. Can landlord sue tenant for the remaining 18 months? Maybe, I will answer the question in greater detail below.

"No", a Landlord may not sue for future rents.

Hypothetically, if the landlord finds a new tenant who begins paying rent the very next month then landlord may not sue the initial previous tenants for the future rent he should have paid. A landlord may not sue a tenant for future unpaid rents at an eviction hearing. Because the landlord won't know how long the property will sit empty and therefore the courts award would be based off of speculation. But a landlord can sue for all past rents owed during an eviction lawsuit.

A landlord has a duty to "mitigate" his losses. A landlord mitigates his losses after an eviction by doing everything possible to re-rent the property. Landlord must take the same actions they would if re-renting the property under normal circumstances. The Arizona landlord cannot simply let the property sit empty for 18 months and then sue the tenant because the property sat empty. He must take all reasonable actions to re-rent the property as soon as possible. Again, a landlord may not sue a tenant for future rent through an eviction lawsuit. However, there is another option a landlord may take to recoup losses from a breaching tenant.

Yes, a Landlord MAY sue a former tenant for unpaid rents.

Yes, a landlord may sue a former tenant for unpaid rents after they were evicted from the Property. However, the landlord must first market and re-rent the Property before suing the former tenant. The law doesn't allow for double-dipping, meaning you cannot sue a former tenant for terminating a lease 16 months earlier while collecting rent each month from a new tenant.

However, you can sue a previous tenant for all the months the Property sat vacant until it was re-leased to a new person. Using the example from above, let's assume the landlord re-rented the Property one month after evicting the previous tenant. In this situation the Property only sat empty for one month and so the previous tenant is only liable to one months rent to the Landlord. Regardless of how many more months or years were left on a previous tenants lease, a landlord can only sue for the months the Property actually sat empty.

For this, and other reasons it rarely makes sense to sue a tenant for the months a Property sat vacant before you re-rented it. Call experienced real estate attorney Clint Dunaway at 480-344-4035 or send me an email at cdunaway@davismiles.com. 

Jul 11, 2018

Possessions of Evicted Tenants

Often tenants will leave personal property on the premises after they have been evicted. As a landlord you cannot simply keep or throw away the former tenant's belongings. The Arizona Landlord-Tenant Act requires to you maintain their possessions for 14 days.
Per A.R.S. § 33-1368(E) a landlord, must hold the evicted tenant's possessions for a minimum of 14 days from the day the Writ of Restitution was issued. As the landlord, you may;
  • Keep the tenant's belongings that the rental property for the 14 days,
  • Move the tenant's belongings to an off-site storage facility,
  • Require the tenant to reimburse you for the actual cost of moving and storing their belongings during the 14 day period,
  • Prohibit the tenants from ever returning to the property without your explicit permission.
As a landlord you may NOT;
  • Require the tenant pay for the judgment you obtained against them prior to releasing the belongings to them. Meaning you cannot require a tenant pay you for all back rent, late fees, attorneys' fees, and court costs prior to returning their belongings. (Again, you can only demand payment for the actual cost of storing and moving the belongings.)
  • Dispose of the tenant's property prior to the expiration of the 14 days.  
If you do choose to remove the tenant's belongings from the rental property use considerable care, you will be responsible for any damage to their belongings. It is a good idea to photograph, or video the premises, so that you have an inventory of what was left behind. Make sure the date can be verified through the images and video. This will also give you the opportunity to catalog any damage to the rental unit itself. Take the inventory prior to moving any of the personal property from the rental unit.

After the 14 day period, if there has been no contact from the evicted party, and they have not claimed, or made and agreement to claim their property, a landlord may sell the items or dispose of the items that were left behind.

Questions regarding the eviction of your Arizona tenant?  Contact Arizona Real Estate Attorney Clint Dunaway at 480-344-4035 or cdunaway@davismiles.com 

Jun 2, 2018

Davis Miles- Business of the Year!

I always say that I work with the greatest group of people and it shows. Last week our law firm was named the Large Business of the Year by the Tempe City of Chamber! It is a real honor and one that we don't take lightly.






May 31, 2018

A.R.S. 33-420: Fraudulently Recorded Documents

In Arizona, there are no real protections that prevent a person from fraudulently recording documents with the county recorder. I could literally quit claim deed the Arizona State Capital building to myself and the county will record it. The recorder’s office does not have the ability or duty to confirm that the documents are legitimate and so this can cause real problems. There are multiple occasions where I’ve had a client come into my office panicked because some type of fraudulent document had been recorded involving one of their properties. I’ve seen cases where easements were added without the owner’s knowledge or permission. Plus I’ve seen parcels split or property completely transferred to another person!!!

WHAT CAN YOU DO IF SOMEONE RECORDS A FRAUDULENT DOCUMENT?

Arizona law won’t prevent someone from wrongfully recording documents against your property. However, Arizona provides strict punishment for those who wrongfully record documents with the county recorder. A.R.S. § 33-420(C) provides for damages against the person who wrongly recorded the document. It allows for a minimum penalty of $1,000, or for treble the actual damage suffered, and attorney's fees.

A.R.S. § 33-420 states:

A. A person purporting to claim an interest in, or a lien or encumbrance against, real property, who causes a document asserting such claim to be recorded in the office of the county recorder, knowing or having reason to know that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid is liable to the owner or beneficial title holder of the real property for the sum of not less than five thousand dollars, or for treble the actual damages caused by the recording, whichever is greater, and reasonable attorney fees and costs of the action.

B. The owner or beneficial title holder of the real property may bring an action pursuant to this section in the superior court in the county in which the real property is located for such relief as is required to immediately clear title to the real property as provided for in the rules of procedure for special actions. This special action may be brought based on the ground that the lien is forged, groundless, contains a material misstatement or false claim or is otherwise invalid. The owner or beneficial title holder may bring a separate special action to clear title to the real property or join such action with an action for damages as described in this section. In either case, the owner or beneficial title holder may recover reasonable attorney fees and costs of the action if he prevails.

C. A person who is named in a document which purports to create an interest in, or a lien or encumbrance against, real property and who knows that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid shall be liable to the owner or title holder for the sum of not less than one thousand dollars, or for treble actual damages, whichever is greater, and reasonable attorney fees and costs as provided in this section, if he wilfully refuses to release or correct such document of record within twenty days from the date of a written request from the owner or beneficial title holder of the real property.

D. A document purporting to create an interest in, or a lien or encumbrance against, real property not authorized by statute, judgment or other specific legal authority is presumed to be groundless and invalid.

E. A person purporting to claim an interest in, or a lien or encumbrance against, real property, who causes a document asserting such claim to be recorded in the office of the county recorder, knowing or having reason to know that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid is guilty of a class 1 misdemeanor.
If someone has recorded a fraudulent document on one of your Arizona pieces of real estate then you need to contact Arizona Real Estate Attorney Clint Dunaway at: 480-344-4035 or email at cdunaway@davismiles.com.





May 11, 2018

Lake Havasu City Justice Court

Yesterday I attended a hearing at the Lake Havasu City Justice Court in Lake Havasu City, Arizona. The Court's address is: 2001 College Dr., Suite # 148 Lake Havasu City, Arizona 86403.

As you can see below it's not the most beautiful court house in Arizona but I guess it gets the job done!

 

Lake Havasu City Justice Court's phone number is: 928-453-0705.

Apr 11, 2018

What is a Lis Pendens?

What is a Lis Pendens?
It is a formal notice of pending legal action. The Lis Pendens is filed with the clerk of the court and then filed with the proper Arizona County Recorder. It must be filed subsequent to the beginning of a lawsuit surrounding the property in question.

What is the purpose of filing a Lis Pendens?
A Lis Pendens provides notice of a claim involving specific real estate to potential buyer, lender, and the general public. It will basically freeze an Arizona property so that it cannot be sold or refinanced.  

What is the effect of a Lis Pendens?
Any future person who acquires an interest in the property after a Lis Pendens is recorded is bound by the ultimate results of the pending lawsuit. So even though the Lis Pendens doesn't legally prevent a sale or loan from a practical point it does. Most prospective buyers, lenders and title insurers are very reluctant to become involved with property that could be adversely impacted by a pending suit.

When will the Lis Pendens be released?
Typically a court will not release the Lis Pendens until the underlying suit has been resolved in favor of the property owner.Therefore, from a practical perspective the lis pendens can tie up a property for years. This can be devastating for the owner and enormous leverage for the claimant. 

Is a Lis Pendens a lien?
No, in and of itself, a Lis Pendens does not place a legal lien on a property but it does carry some of the traits of a traditional lien.

If you have had a Lis Pendens filed against one of your properties or if you think you need to record a Lis Pendens then call real estate attorney Clint Dunaway at 480-344-4035 or email at: cdunaway@davismiles.com. 

Apr 5, 2018

Arizona's Anti-Deficiency Statutes

In Arizona, certain home owners are free to stop making payments their home and walk away from it with no financial recourse against them. These people are protected by what is commonly known as Arizona’s Anti-Deficiency Statutes.

Protection for residential borrowers is set forth primarily in A.R.S. §§ 33-729(A) which provides in part:
“if a mortgage is given to secure the payment of the balance of the purchase price, or to secure a loan to pay all or part of the purchase price, of a parcel of real property of two and one-half acres or less which is limited to and utilized for either a single one-family or single two-family dwelling, the lien of judgment in an action to foreclose such mortgage shall not extend to any other property of the judgment debtor, nor may general execution be issued against the judgment debtor to enforce such judgment.”

Qualifying Properties.
To obtain anti-deficiency protection the property securing the loan must be (1) two and one-half acres or less, (2) limited to a single one-family or a single two-family dwelling. The Arizona Supreme Court has interpreted this language to require that the dwelling be built and at least occasionally occupied. Mid Kan. Fed. Sav & Loan Ass’n, 167 Ariz. At 129, 804 P.2d at 1317. The property will qualify under the statute for anti-deficiency protection whether occasionally occupied by the owners or third party renters. Northern Arizona Properties v. Pinetop Properties Group, 151 Ariz. 9, 725 P.2d 501. (3) Additionally, the mortgage must be “given to secure the payment of the balance of the purchase price”. This is commonly known as a “purchase money mortgage”. Therefore, the statute does not protect borrowers who have obtained “non-purchase money mortgages” such as home equity lines of credit.

Qualifying Mortgages.
Additionally, the mortgage must be “given to secure the payment of the balance of the purchase price”. This is commonly known as a “purchase money mortgage”. Therefore, the statute does not protect borrowers who have obtained “non-purchase money mortgages” such as home equity lines of credit.

Refinanced Original Loan.
In Bank One, Arizona, NA. v. Beauvais, the Arizona Court of Appeals dealt with the extending, renewal or refinance of purchase money loans and held that:
"Given these strong statements concerning the legislature's consumer protection objective, we believe the legislature did not intend that a loan would lose its character as a purchase-money obligation when, as here, it is extended, renewed, or the remaining portion of the original loan is refinanced and the deed of trust on the property that was bought with the original loan continues or is renewed."

Debtor Protection.
If the property meets Arizona’s anti-deficiency statute, the lender may not obtain a deficiency judgment against the debtor. If a qualifying property is sold by the lender “no action may be maintained to recover any difference between the amount obtained by sale and the amount of the indebtedness and any interest, costs and expenses”. A.R.S. §§ 33-814(G). Therefore, certain Arizonian’s are able to walk away from their homes and face no financial recourse from their lender. 

If you need help from an Arizona real estate attorney then call Clint Dunaway at 480-344-4035 or email at cdunaway@davismiles.com.

Mar 30, 2018

Green Valley Justice Court - Pima County, Arizona



Green Valley Justice Court -  Pima County
Address: 601 N La Cañada Dr, Green Valley, AZ 85614
Green Valley Justice Court Phone: 520-648-0658

I have traveled just about every corner of Arizona attending hearings for our clients in the justice court system. I've only traveled to the Green Valley Justice Court a few times for forcible detainer hearings and so the last time I was there I thought I'd better take a few pictures and post them to the blog. This courthouse was built in 1982 as the result of considerable population growth in the area.

The Honorable Lisa Royal is the currently presiding over the bench in Green Valley Justice Court. Judge Royal received her Bachelor’s Degree in Criminal Justice and Public Administration from the University of Arizona and a Masters in Public Administration from the University of Southern California.

Green Valley is located 20 miles south of Tucson and 40 miles north of Nogales, Arizona. It is in the heart of the Santa Cruz Valley. Residents of Green Valley, Arizona and tourists enjoy cycling, hiking and bird watching in the nearby Santa Rita Mountains.



Picture of the entrance of the Green Valley Justice Court, located in Green Valley, Arizona.



Green Valley Justice Court's Address is: 601 N. La Canada Dr., Green Valley, AZ 85614.



If you need an Arizona landlord - tenant attorney to assist with a dispute regarding a tenant than call Clint Dunaway, Esq. at 480-344-4035 or email at cdunaway@davismiles.com. 

Mar 21, 2018

Partitioning Real Estate in Arizona

Occasionally people who jointly own Arizona real estate will disagree about whether to sell the property and or how to manage it. I typically see this scenario where a boyfriend-girlfriend purchased a home together and then later have a falling-out. In this situation they are both equal owners, so can one of the parties force the other to sell even if they don't want to? Yes! There is an Arizona Statute that specifically addresses what to do in these situations.

A.R.S. § 12-1211 states:
A. The owner or claimant of real property or any interest therein may compel a partition of the property between him and the owners or claimants by filing a complaint in the superior court of the county in which the property, or a portion thereof, is situated.
B. The complaint shall state:
  1. The names and residences, if known, of each of the owners or claimants.
  2. The share or interest which plaintiff and the owners or claimants own or claim, so far as known to plaintiff.
  3. A description of the real property to identify it and its estimated value. 
Once the property is sold the net proceeds will be distributed between the owners.



If you need help from an Arizona real estate attorney with partitioning your property in Arizona then call me at: 480-344-4035 or email at cdunaway@davismiles.com.

Mar 15, 2018

Landlord Entering Home Without Permission

What should you do if a landlord enters into your property without your permission?

Arizona law requires that landlords give tenants at least a 48 hour notice prior to entering the property. However, what options do you have if the landlord just enters into the property? The Arizona Landlord Tenant Act addresses this exact issue. A.R.S. § 33-1376(B) states:
"If the landlord makes an unlawful entry or a lawful entry in an unreasonable manner or makes repeated demands for entry otherwise lawful but which have the effect of unreasonably harassing the tenant, the tenant may obtain injunctive relief to prevent the recurrence of the conduct or terminate the rental agreement. In either case, the tenant may recover actual damages not less than an amount equal to one month's rent."
So this statute provides an Arizona tenant with two different options if the landlord enters the property without permission or is constantly demanding to enter the property to the point that it becomes a form of harassment.

Two Options Available If Your Landlord Enters Without Your Permission

  1. Obtain injunctive relief- This is a fancy way of saying of getting an Injunction Against Harassment or Restraining Order against the landlord. With either of these tools you will have the backing of the court to stop the harassment. 
  2. Terminate the Rental Agreement- Regardless of how much or how little time is left on your lease if your landlord has entered your house without your permission then you can cancel your lease. 
Monetary Damages Against Trespassing Landlord

The second part of A.R.S. § 33-1376(B) requires the landlord to pay the tenant a "fine" equal to one month's rent. So for example, if your rent is $1,500 per month then you would be able to recover $1,500 from the landlord.

However, in order to recover the one months rent from the landlord a tenant must elect one of the two options from above. Meaning, the tenant must either obtain an Injunction Against Harassment or actually terminate the lease agreement. A tenant cannot just say, "well, the landlord entered my property without my permission and now I want my money."

If you have questions about a landlord entering a house without permission then email me at cdunaway@davismiles.com or call us at 480-344-4035.




Feb 23, 2018

Terminating a Commercial Lease

*** This Blog Post Only Applies to Commercial Lease Agreements ***

Most commercial lease agreements have what is called a "holdover provision". This provision details what will happen when the original lease ends and a formal extension is not filed. The holdover provision will say something like, "either the tenant or the landlord can terminate the lease with a 60-day notice".

However, in the event that the commercial lease is silent on how to terminate the lease once it has become month to month then A.R.S. § 33-341(B) which states in part: "A lease from month to month may be terminated by the landlord giving at least ten days notice thereof."

I find this amazing that a landlord can terminate a commercial lease by only giving the tenant ten (10) days to vacate! What if you have a large warehouse full of supplies? What if you have a thriving medical practice? Without pre-negotiated terms you may be subject to a ten (10) day notice to vacate! A.R.S. § 33-1375(B) of the Arizona Residential Landlord - Tenant Act requires landlords to give their tenants at least 30 days to vacate. It's amazing that businesses are given even less time to pack up their stuff and leave!

What Should Commercial Tenants Do?

If you are negotiating a commercial lease agreement you need to specifically negotiate a "holdover provision". This provision should detail exactly how a lease will terminate. Depending on your type of business you may want to require a 90 day notice from the landlord.

Commercial lease agreements are usually last many years and involve hundreds of thousands of dollars in rent so before signing on the dotted-line make sure you have negotiated the terms that will protect your needs. If you would like assistance drafting or negotiating a commercial lease agreement then call us at 480-344-4035 or email me at cdunaway@davismiles.com. 

*** This Blog Post Only Applies to Commercial Lease Agreements ***

Jan 31, 2018

What is a 26.1 Initial Disclosure Statement?


Rule 26.1 of the Arizona Rules of Civil Procedure requires both parties of a law suit to exchange Initial Disclosure Statements. These disclosure statements are often referred to as "Rule 26.1 Statements" or "Rule 26.1 Disclosures" for short.

Rule 26(d)(1) of the Arizona Rules of Civil Procedure requires that the disclosure statement is provided to the opposing party within forty (30) days of the defendant filing an answer. These statements are not filed with the court but simply shared with the opposing party. Many years ago Arizona courts decided to do what they can to help avoid "trial by ambush". That is, that want parties to share whatever information that exists with the opposing party. In theory this is supposed to increase the likelihood of parties settling without court intervention.

What Must the Rule 26.1 disclosure statement must contain?:
  1. A list of all possible trial witnesses. Note, just because a person is listed it does not mean that they must later testify. It simply gives the opposing party notice that you may be interested in having this person testify at the trial and what they may be testifying about.
  2. A list of other people with knowledge. This list is to include all persons who will not be called as trial witnesses, but who have information that may be pertinent to the subject of the lawsuit.
  3. Statements. Each party to the lawsuit must provide a list of any written or recorded statements within their possession to the other party. 
  4. Copies of exhibits and information. Each party must disclose all documents or exhibits they wish to use to support their claim or defense. Including any electronically stored documents. 
  5. List of all other Documents. This list must include all other relevant documents that are known to exist, regardless of whether or not they are favorable to your case. 
If either party discovers new information after having shared an initial 26.1 disclosure statement then they are required to provide an "amended" disclosure statement with the opposing party.

If you have questions about how we can help you with your real estate litigation needs then email me at cdunaway@davismiles.com or call 480-344-4035.