Clint Dunaway, Author at Dunaway Law Group, PLC Page 2 of 20

Statute of Frauds

What is the Statute of Frauds?

The Statute of Frauds is a legal doctrine that requires certain types of real estate contracts be in writing to be legally enforceable. Its primary purpose is to prevent fraudulent claims and misunderstandings arising from verbal agreements and to create a clear and verifiable record of important contractual obligations. In Arizona, the Statute of Frauds for real property transactions is governed by A.R.S. § 44-101.

Real Property Transactions Covered by the Statute of Frauds in Arizona

The Arizona Statute of Frauds mandates that contracts involving the sale, exchange, or lease of real property, or any interest in real property, must be in writing to be legally enforceable. This encompasses a wide range of real estate transactions, including but not limited to:

Sales of Land and Homes: Any agreement to buy or sell a piece of land or a residential property, whether it’s a single-family home or a condominium, must be documented in writing to be legally binding.
Lease Agreements: If you’re entering into a lease agreement for real property, such as leasing a commercial space or residential unit for a term exceeding one year, it must also be in writing to be enforceable.
Real Estate Option Contracts: Option contracts, which give one party the right to buy or sell real property at a specified price within a specified timeframe, must be in writing to be legally valid.

Key Elements of a Valid Written Agreement

To comply with the Statute of Frauds in Arizona, a written agreement related to real property transactions must include certain key elements:

Identification of the Parties: The names and addresses of all parties involved in the agreement must be clearly stated.
Property Description: A detailed description of the real property being transacted, including its legal description, address, and any relevant parcel or tax identification numbers, should be included.
Terms and Conditions: The terms of the agreement, including the purchase price, financing arrangements, and any contingencies or conditions, should be spelled out.
Signatures: The written document should be signed by all parties involved. Signatures are a critical component of demonstrating consent and intention to be bound by the contract.

Implications of Non-Compliance with the Statute of Frauds

Failing to adhere to the Statute of Frauds can have significant consequences. A contract that doesn’t meet the statutory requirements is generally unenforceable in a court of law. This means that parties may not be able to enforce their rights, collect damages, or compel performance if the contract is solely oral or inadequately documented.

Seek Legal Guidance

In conclusion, the Statute of Frauds in Arizona is a fundamental legal doctrine that underscores the importance of written agreements in real property transactions. If you need assistance with a real property transaction or dispute then contact the Dunaway Law Group at 480-702-1608 or message us HERE.

* These blog posts are not intended, nor shall they be deemed to render legal advice. Reading these blog post does not create an attorney-client relationship, nor shall it impose an obligation on the part of the law firm to respond to further inquiry. The Dunaway Law Group limits its practice to the states of Arizona and New York.

Buying a House with a Shared Well

When buying an Arizona home with a shared water well, there are certain considerations to keep in mind. Many homebuyers have questions and concerns about shared wells when they’ve never lived in a house that shares a water well. By definition, a shared well is a water well that services two or more homes for residential purposes.

If you are consider buying a home that has a shared well, there are a few important things to keep in mind:

Is there an existing shared well agreement? Is it up to date? Accurate?
What are the monthly operating costs?
Are there any built-in contingencies for remediation, repairs, maintenance, and quality testing?
Are there any restrictions placed on your system? For instance, does the shared well agreement prohibit the use of swimming pools?
Are there well records showing the history of maintenance and repairs?

inspecting the well

Arizona private well owners are left to manage and protect their own wells. There are no standards for the performance of private or shared water wells during the sale and transfer of the real estate upon which the well is constructed. Inspecting the well is not a legal requirement but you’d be crazy not to inspect it. Any buyer should know the condition of the well because it could need costly repairs and/or maintenance! Depending on the condition of the well a would-be home buyer may want to offer les for the house or not even buy it.

*Note: Arizona home inspectors do not inspect wells as part of the home buyer’s inspection. They inspect the entire house but not the well!

It is imperative that a shared well is functionig properly, otherwise dozens of people may be without water!

Here are a few basic items that should be in a shared well agreement:

Specification of the cost involved to share your pump in regards to power, repairing, testing and inspecting.
Requirement for corrective courses of action if testing reveals a deficiency.
Prohibit the use of the well water by any party for any reasons other than for bona fide domestic usage.
No additional residences may connect and use of the water.

disclosure forms provided by AZ realtors

The Arizona Association of Realtors as a trade association has enacted standards for the management of all exempt wells in the state of Arizona during sales and transfer of real estate. This fantastic idea is being done by the Realtors association without authorization by the Arizona Legislature or ADWR.

The Arizona Realtors group has authorized and put into place two forms that all Realtors must use to inform buyers of real estate served by private water wells. They must be used for each transaction involving private or shared water wells. They are the Domestic Water Well Addendum and the Domestic Water Well Water Use Addendum Seller’s Property Disclosure Statement. They promulgated these forms because it is essential information necessary for the protection of the health, safety, and welfare of home buyers relying on exempt wells.

The first form, the Addendum, must be signed by both the seller and the buyer. The addendum informs the buyer that the Arizona home is supplied with water from a residential water well. The second form, the Disclosure Statement, provides the buyer with the best detailed information about the well that the seller can provide. Most well owners are not familiar with the information requested on the form. The “best information that the seller can provide” is what a buyer gets from this form.

prepare early to avoid delays in closing

A proper shared well agreement requires the signatures from the owners of each property that will be receiving water from the shared well. Hammering out the details of the agreement can be an incredible hassle. Sometimes a homeowner will dig in their heels over a certain provision. The back and forth can cause the sale to be delayed if the parties do not plan accordingly.

the importance of maintaining proper shared well records

Shared well agreements and their records can often become more and more innacurate. New owners will began accessing the well without written record or the parcel size / shape is changed because it has been split.

If you are looking to draft a shared well agreement or make amendments to an existing shared well agreement, then contact us at 480-702-1608 or message us HERE.

* The information provided is informational only, does not constitute legal advice, and will not create an attorney-client or attorney-prospective client relationship. Additionally, the Dunaway Law Group, PLC limits its practice to the states of Arizona and New York.

Arizona Well Registry Numbers

The Arizona Groundwater Management Act of 1980, mandated that all property owners register their wells with the Arizona Department of Water Resources. Additionally, the Act requires all property owners with a well to maintain accurate ownership information. Regardless of whether the well is shared or not.

However, frequently properties with wells are sold or transferred without informing the ADWR that there was a change in ownership. FYI, recording a deed of title with the county recorder does not notify the ADWR that the well has changed ownership. As such, many original property owners are still listed with the ADWR as the current owner.

Well Registry Numbers– The Arizona Department of Water Resources (ADWR) assigns a well registry number to each well when it is drilled. The well registry number is a unique number assigned to only one well. They are similar to a car’s Vehicle Identification Number (“VIN”) in that no two cars have the same numbers.

Well Registry Number’s “55-“. Well registry numbers all begin with 55- and then are followed by six numerical digits. Well Registry Numbers do not change even if well changes ownership.

verifying well ownership with the adwr

Well ownership can be checked by visiting the ADWR’s website. Click HERE. You can search by using the Well Registry Number, Property Owner Name or Search of Location (Township/Range, Parcel, Cadastral, Basin or Sub-basin). If you want help using the ADWR’s website you can watch a YouTube video I made explained the process in detail. Click HERE to watch my video.

REGISTERING a WATER WELL

If your water well is not registered in your name, you may not have a “known or definable” source of water for your home. Arizona does not consider groundwater to be private property belonging to the landowner. Exempt well water rights are more like an operating permit to withdraw a state managed natural resource.

Additionally, if a well is not registered in the owner’s name the ADWR cannot provide important notices of changes in groundwater laws that may affect their water rights.

ADWR Forms Mandated by A.R.S § Title 45

Form DWR 55-71A can be used to update the ADWR of the new owner. That same form can also be used to correct or change well location information, the name of the well drilling company to be used to drill or deepen the well, or any other pertinent information about the well.

Escrow officers will often use this form to record a transfer of well ownership with the Arizona Department of Water Resources at the time of escrow closing.

LOCATING WELL RECORDS

There are three basic ways to locate Arizona water well records. You can access well file data in the ADWR Imaged Records database the following ways;

1. Using the well registration number (55-000000), 2) by entering the file or cadastral (registry of real state property) designation of your well, or 3) by finding and clicking on a red dot a topographic map of the state of Arizona where your well is located. After locating your well records, you can download them in a pdf file format.

The first step is logging on to the ADWR web site as explained below. Log on to the ADWR Home Page and scroll down to Quick Links: and click on the Imaged Records logo, which will direct you to a page with a box named Search ADWR’s Imaged Records. Change the Imaged Record: field from “Groundwater Document” to “Well Record Document” using the scroll down menu on the right.

steps to registering a well

First Step to Register a Water Well– The first step to registering a water well is to visit Change of Well Ownership (azwater.gov) and enter the well’s 55- number.
Second Step to Register a Water Well– The second step to changing well ownership is to provide the new owner’s name and contact information.
Third Step to Register a Water Well– The third step to registering a water well is to provide proof of ownership. Lastly, you must pay a $30 fee.

If you need assistance with your water well then contact the Dunaway Law Group at 480-702-1608 or message us HERE.

Subordination Agreement in Commercial Leases

Understanding Subordination Agreements in Commercial Leases

A subordination agreement modifies the priority of liens or claims on a property. In the context of commercial leases, a subordination agreement addresses the relationship between the tenant, landlord and lender.

Importance of Subordination Agreements Commercial Leases

1. Ensuring Lender’s Priority: Subordination agreements primarily protect the interests of lenders (banks) by allowing them to maintain their position as the primary lienholder. This protects the lender’s investment and ensures that they have first claim to the property in the event of default or foreclosure.

2. Subordination of Tenant’s Rights: The subordination agreement explicitly states that the tenant’s leasehold interest is subordinate to the lender’s mortgage or deed of trust. This provision establishes the priority of the lender’s claim over the tenant’s interest in the property.

3. Facilitating Financing: Subordination agreements can help tenants secure financing for improvements or expansions of the leased premises. By agreeing to subordinate their leasehold interest to the lender’s mortgage, tenants provide assurance to lenders that their claims will be secondary, thereby making it easier for tenants to obtain financing.

Key Provisions in Subordination Agreements

1. Non-Disturbance Clause: A non-disturbance clause is often included in subordination agreements to protect the tenant’s rights in case of foreclosure. It ensures that if the property is foreclosed upon, the tenant’s lease will remain valid and enforceable, and the tenant will not be evicted or disrupted by the foreclosure process.

2. Attornment: Attornment refers to the tenant’s acknowledgment and acceptance of a new landlord in the event of a transfer of ownership or foreclosure. Subordination agreements often require the tenant to recognize and attorn to the new landlord or owner, maintaining the lease obligations and rights under the original lease.

3. Notice Requirements: Subordination agreements typically outline the notice requirements for all parties involved. This ensures that the tenant is informed of any actions taken by the lender or landlord regarding the property, such as foreclosure proceedings or potential changes in ownership.

Conclusion:
Subordination agreements are vital instruments that govern the relationship between lenders, landlords, and tenants in Arizona commercial leases. By clarifying the priority of interests, these agreements protect the rights of all parties involved. For tenants, subordination agreements can facilitate financing and provide security in the event of foreclosure.

If you are looking to draft a commercial lease agreement and have questions about subordination agreements then contact the Dunaway Law Group at 480-702-1608 or message us HERE.

The Dunaway Law Group provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice and does not create a lawyer-client or attorney-prospective client relationship. Readers should not act upon this information without seeking advice from professional advisers. This Firm limits its practice to the states of Arizona and New York.

Benefits of Shared Well Agreements

An expertly crafted shared well agreement is custom tailored to fit each unique situation. By clearly defining the rights and responsibilities of each household there is a reduction in disputes and an increase in peace of mind. Boilerplate well share agreements found online cannot provide the accuracy needed to make sure things go smoothly. In fact, generic agreements can create major problems.

Over the years, I have spoken to literally hundreds of Arizonians with some type of dispute regarding a shared well. A common variable in these situations is a poorly written shared well agreement or none at all.

Our well share agreements add details about things like how water can be used and how much. For example, it will state, “The Well water shall only be used for bona fide domestic purposes. The water shall not be used for watering crops, orchards, livestock, or extensive gardening. Additionally, the water cannot be sold or used for any commercial activities.”

Because wells do not produce an infinite supply of water, overuse by one family may leave the other homeowners without sufficient water. Many wells simply cannot produce enough water for all homeowners to have extensive gardens, pools and water horses. This will put additional strain on the well system and the other users will be stuck with a higher electricity bill and low water pressure. As such, we write provisions into the agreement to prevent this type of behavior as much as possible.

Every situation is different, every property is different, every well is different, and this is why we create custom agreements for each client. In addition to providing advice on the general issues we also provide advice on more nuanced issues. For instance;

Must each property have its own water flow meter?
Should property owners not using the well, (their parcel is vacant land), still pay for costs and repairs even when not drawing water from the well?
What if a homeowner no longer wants to draw water from the well? Must they continue to pay for maintenance and repairs?
What about swimming pools? Horses? Orchards? Gardens?
Is there a buy-in for ‘late comers’?

benefits to the well owner- “grantor”

A well share agreement benefits a well owner by giving them enforceable rights against the water recipients. For example, if the Grantees to the agreement do not pay their share of well maintenance, repairs, electricity, etc. they can simply turn off their water.

benefits to the water recipients- “grantees”

Shared well agreements provide Grantees–those receiving the water–a legal right to draw water from the well. The Agreement is the only assurance Grantees have with a legal right provided in the agreement. Without a written shared well agreement, a well owner (Grantor) could deny access to a Grantee. If your water comes from a shared well that is not located on your property, then you must take steps to protect your legal right to the water.

A Grantee might think, “I don’t need a formal shared well agreement because I’m friendly with my neighbors and we all get along.” But what if those friendly neighbors move? Will you still have a legal right to the water? Because without a shared well agreement, the well owner has no legal obligation to share the well water with you!

All groundwater withdraws in Arizona must come from a water well that was permitted by the Arizona Department of Water Resources. Owning the land free and clear, or owning an undivided interest in the land or having an easement right does not give a land owner the right to extract groundwater. The right to extract groundwater only from a permitted well.

Gather & verify the information

The first step to drafting an excellent shared well agreement is to verify that the information used is accurate and complete. Using outdated or inaccurate information is like a great chef trying to make a crème brulée with the wrong or expired ingredients. No matter how great the recipe, if the right ingredients are not used then it doesn’t matter, it still won’t taste good.

An assessor’s parcel number is one example of where we need to closely check our information for accuracy. A parcel number—sometimes abbreviated APN—is a unique descriptor used by each county in Arizona to identify and assess real property. The parcel number includes information about the ownership, characteristics, and valuation of each piece of land. While each parcel can only have one parcel number at a time, the parcel numbers can change. New parcel numbers are assigned each time a property is split, merged, or subdivided. Verifying the correct parcel number is just one example of how we thoroughly check the information used in our well share agreements.

Verify Ownership Records With the ADWR

Even though the Arizona Department of Water Resources (ADWR) does not oversee Shared Well Agreements, they still require that the Well ownership information to be accurate. Well ownership information can become outdated if a well property is sold but the ownership information is not updated.

Simply purchasing a property and recording the deed with the county recorder does not notify ADWR that the Well ownership has been transferred. A new owner must take the overt steps of updating the Well in their name. The records are updated by submitting the necessary information and paying a small fee.

A PERSON TO WHOM A WELL IS REGISTERED MUST NOTIFY THE ARIZONA DEPARTMENT OF WATER RESOURCES (ADWR) OF A CHANGE IN OWNERSHIP OF THE WELL AND THE NEW OWNER MUST FURNISH INFORMATION AS REQUIRED BY ADWR TO KEEP WELL REGISTRATION RECORDS CURRENT AND ACCURATE.
A.R.S. 45-593(C)

record THE AGREEMENT

Once the Agreement has been approved and signed by all Parties, it is recorded with the county. In large part it is recorded so that someone cannot later challenge the veracity or accuracy of the Agreement.

Once the Shared Well Agreement is recorded with the county, a copy is provided to the ADWR. They will scan the recorded agreement and save it in the Well’s permanent file.

Even though the ADWR does not get involved in Shared Well Agreements it is still a best practice to send them a copy of the recorded agreements.

If you need help from an experienced shared well attorney, then contact the Dunaway Law Group at 480-702-1608 or message us HERE.

* The information provided is informational only, does not constitute legal advice, and will not create an attorney-client or attorney-prospective client relationship. Additionally, the Dunaway Law Group, limits its practice to the states of Arizona and New York.