The Subdivision Public Report Developers are required to give new home buyers in a subdivision an Arizona Department of Real Estate ("ADRE") Public Report. The Public Report should be read before signing any contract to purchase a new home. Although some of the information becomes outdated or is no longer accurate, subsequent buyers may also benefit from reviewing the Public Report. Public Reports dating from January 1, 1997, are now or will be available on the ADRE website at http://159.87.254.2/publicdatabase/. The purpose of the Public Report is to point out material information about the development. For example, the section of the Public Report entitled "Adjacent Lands and Vicinity" will disclose adjacent land uses that may be of concern. Note, however, that the Public Report is prepared by the subdivider, could be inaccurate, and should be verified.

October 2006 1 Initials _________ / __________ October 2006 2 Initials _________ / __________

The ADRE does not independently verify the information in the Public Report. Additional information about the Public Report may be found on the ADRE website at www.azre.gov/PUBLIC_INFO/Documents/Property_Buyer_Checklist.html

Seller´s Property Disclosure Statement ("SPDS")

Most sellers provide a SPDS. This document poses a variety of questions for the seller to answer about the property and its condition. A buyer should carefully review the SPDS and verify those statements of concern. The ADRE advises: "Read the seller´s property disclosure report, and check every item on it. Ask to see receipts for repairs to the home. . . . Look for stains on the ceilings or carpets that might indicate water damage. Read the purchase contract carefully to determine if there are any deadlines for challenging the seller´s disclosure report or for having your own inspections conducted." www.azre.gov/PUBLIC_INFO/Documents/Property_Buyer_Checklist.html

A real estate agent is not responsible for verifying the accuracy of the items on the SPDS. If the real estate agent is aware of a misrepresentation, the agent is required to disclose it to their client, but the agent is not required to confirm all the information on the report. Remember, your review of the SPDS is not a substitute for professional inspections.

Covenants, Conditions and Restrictions ("CC&Rs")

The CC&Rs are recorded against the property and generally empower a homeowner´s association to control certain aspects of property use within the development. By purchasing a property in such a development, the buyer agrees to be bound by the CC&Rs. Thus, the CC&Rs form an enforceable contract. The association, the property owners as a whole, and individual property owners can enforce the contract. It is essential that the buyer review and agree to these restrictions prior to purchasing a property.

The ADRE advises: "Read the deed restrictions, also called CC&Rs (covenants, conditions and restrictions). You might find some of the CC&Rs are very strict, especially those addressing landscaping, RV parking, play equipment, satellite antennas, and other common amenities - particularly if the subdivision is governed by a homeowner´s association."

A short but informative document on the purpose and effect of CC&Rs may be read at www.realtor.com/BASICS/condos/ccr.asp. Buyers should consult legal counsel if uncertain of the application of particular provisions in the CC&Rs.

Homeowner´s Association ("HOA") Governing Documents

In addition to CC&Rs, HOAs may be governed by Articles of Incorporation, Bylaws, Rules and Regulations, and often architectural control standards. The HOA is in place to own and operate portions of a planned community and attempts to preserve the value of property in the condominium or planned community. Read and understand these documents. Also, be aware that some HOAs impose fees that must be paid when the property is sold, so it is important to ask if the purchase of the property will result in any fees. Condominium and planned community HOAs are also regulated by Arizona statutes; however, they are not under the jurisdiction of the Department of Real Estate. If you have questions about your rights and remedies regarding homeowner´s associations or community associations, read the information provided at www.azre.gov/PUBLIC_INFO/Documents/Purchasing_A_Home_Read_This.html#LINK11

HOA Disclosures

If purchasing a resale home in a condominium or planned community, the seller (if fewer than 50 units in the community) or the HOA (if there are 50 or more units) must provide the buyer with a disclosure containing a variety of information, including the principal contact for the association, assessments, the money held by the association as reserves and, if the statement is being furnished by the association, a statement as to whether the records of the association reflect any alterations or improvements to the unit that violate the declaration. See www.azleg.state.az.us/ars/33/01260.htm and www.azleg.state.az.us/ars/33/01806.htm for the laws detailing these requirements.

Title Report or Title Commitment

The title report or commitment contains important information and is provided to the buyer by the title/escrow company or agent. This report or commitment lists documents that are exceptions to the title insurance (Schedule B Exceptions). Schedule B Exceptions may include

October 2006 3 Initials _________ / __________

encumbrances, easements, and liens against the property, some of which may affect the use of the property, such as a future addition or swimming pool. Make sure you receive and review all of the listed documents.

Questions about the title commitment and Schedule B documents may be answered by the title or escrow officer, legal counsel, or a surveyor. General information regarding title issues may be found at www.alta.org/consumer/questions.cfm or obtained from the title/escrow company employed in the transaction.

Loan Documents

Unless a buyer is paying cash, the buyer must qualify for a loan in order to complete the purchase. A buyer should complete a loan application with a mortgage broker or a mortgage banker before making an offer on a property if at all possible and, if not, immediately after making an offer. It will be the buyer´s responsibility to deposit any down payment and insure that the buyer´s lender deposits the remainder of the purchase price into escrow prior to the close of escrow date. Therefore, make sure you get all requested documentation to your lender as soon as possible. For information on loans and the lending process, visit the following websites:

Ginnie Mae: www.ginniemae.gov/2_prequal/intro_questions.asp?Section=YPTH

HUD: www.hud.gov/

Mortgage Bankers Association: www.mbaa.org/

National Association of Mortgage Brokers: www.namb.org/

Home Warranty Policy

A home warranty may be part of the sale of the home. Buyers should read the home warranty document for coverage and limitation information. Be aware that pre-existing property conditions are generally not covered under these policies.

Affidavit of Disclosure

If the buyer is purchasing five or fewer parcels of land (whether improved or vacant), other than subdivided land, in an unincorporated area of a county, the seller must furnish the buyer with an Affidavit of Disclosure. A sample form is located at www.aaronline.com/documents/affidavit.aspx.

Lead-Based Paint Disclosure Form

If the home was built prior to 1978, the seller must provide the buyer with a lead-based paint disclosure form. Information about lead-based paint may be obtained at www.azre.gov/PUBLIC_INFO/Documents/Purchasing_A_Home_Read_This.html#LINK12 or www.epa.gov/lead/.

County Assessors/Tax Records

The county assessor´s records contain a variety of valuable information, including the assessed value of the property for tax purposes and some of the physical aspects of the property, such as the reported square footage. The date built information in the assessor´s records can be either the actual or effective/weighted age if the residence has been remodeled. All information on the site should be verified for accuracy. Information is available on county websites:

Coconino: www.coconino.az.gov/

Maricopa: www.maricopa.gov/assessor and http://treasurer.maricopa.gov/parcels/

Pima: www.co.pima.az.us/navigate.aspx?L1=1&L2=11

Yavapai: www.co.yavapai.az.us/

Other counties: www.az.gov/webapp/portal

Professional Home Inspection Report

For the buyer´s protection, the importance of having a home inspected by a professional home inspector cannot be over-emphasized, regardless of whether the home is new or a resale. A home inspection is a visual physical examination, performed for a fee, designed to identify material defects in the home. The home inspector will generally provide the buyer with a report detailing information about the home´s condition. The inspector and the report will point out existing problems and possible potential problems. The buyer should carefully review this report with the inspector and ask the inspector about any item of concern. Pay attention to the scope of the inspection and any portions of the property excluded from the inspection.

Home inspectors must be licensed by the State of Arizona. A list of certified home inspectors may be found at the Arizona Board of Technical Registration website, www.btr.state.az.us. Additional information on

October 2006 4 Initials _________ / __________

inspections may be found at the American Society of Home Inspectors website, www.ashi.com, and guidance on hiring a home inspector may be

found at www.realtor.com/basics/buy/inspnegot/hire.asp?gate=realtor&poe=propertystore

Termites and Other Wood Destroying Insects and Organisms

Termites are commonly found in some parts of Arizona. Investigating evidence of termites or other wood infestation is the job of the pest inspector. The Structural Pest Control Commission ("SPCC") regulates these inspectors and can provide the buyer with information regarding past termite treatments on a property. The SPCC publication, What You Should Know About Wood Infestation Reports, can be found at www.sb.state.az.us/wir.htm. Additional information may be obtained at the SPCC website at www.sb.state.az.us or by calling 800-223-0618.

Every buyer and every property is different, so the physical property conditions requiring investigation will vary.

Repairs and New Construction

The seller may have made repairs or added a room to the property. For example, the property may have an obvious improvement, covered patio, or garage, or may have been remodeled. The buyer should feel comfortable that the work was properly done or have an expert evaluate the work. Request copies of permits, invoices or other documentation regarding the work performed. The Registrar of Contractors´ ("ROC") publication, Hiring a Licensed Contractor, is available on the ROC website, www.rc.state.az.us/Consumer_menu.html. The Arizona Chapter of the National Association of the Remodeling Industry may be contacted at http://aznari.com/. For information regarding permits, contact the city or county building department.

Roof

The inspector might recommend that you have the roof further inspected by a licensed roofer. If the roof is 10 years old or older, a roof inspection by a licensed roofer is highly recommended. See the ROC information on hiring a licensed contractor online at www.rc.state.az.us/Consumer_menu.html or the Arizona Roofing Contractors Association at www.azroofing.org.

Swimming Pools and Spas

If the property has a pool or a spa, the home inspector might determine the cleaning system is not working properly or may exclude the pool or spa from the general inspection. It would then be necessary to have a pool or spa company inspect the pool or spa and/or evaluate any problem. See the Arizona Chapter of the National Spa & Pool Institute at www.azpoolspas.org.

Swimming Pool Barriers

Each city and county has its own swimming pool barrier ordinance. Pool barrier contact information for Arizona cities and counties may be found at www.aaronline.com/documents/pool_contacts.aspx. The Arizona Department of Health Services Private Pool Safety notice may be found at www.hs.state.az.us/diro/admin_rules/pool_rules.htm. The state law on swimming pools is located at www.azleg.state.az.us/ars/36/01681.htm.

Square Footage

Square footage on the MLS printout or as listed by the county assessor´s records is often only an estimate and generally should not be relied upon for the exact square footage in a property. An appraiser or architect can measure the property´s size to verify the square footage. If the square footage is important, you should have it confirmed by one of these experts during the inspection period in a resale transaction and prior to executing a contract in a new home transaction. A list of appraisers may be found at the Arizona Board of Appraisal, www.appraisal.state.az.us/Directory/directory.html. A list of architects may be found at the Board of Technical Registration, www.btr.state.az.us.

Sewer

Even if the listing or SPDS indicates that the property is connected to the city sewer, a plumber, home inspector, or other professional should verify it. Some counties and cities can perform this test as well.

October 2006 5 Initials _________ / __________

Septic and Other On-Site Wastewater Treatment Facilities

If the home is not connected to a public sewer, it is probably served by an on-site wastewater treatment facility (septic or alternative system). A qualified inspector must inspect any such facility six months prior to transfer of ownership. For information on current inspection and transfer of ownership requirements, contact the county environmental/health agency or the Arizona Department of Environmental Quality at www.adeq.state.az.us/environ/water/permits/wastewater.html. For general information on maintenance of a septic system, go to www.septic-info.com/.

Water/Well Issues

You should investigate the availability and quality of the water to the property. For information on wells and assured/adequate water, go to www.azwater.gov/dwr/Content/Find_by_Program/Wells/default.htm or www.azwater.gov/WaterManagement_2005/Content/OAAWS/default.asp.

Arizona is undertaking several General Stream Adjudications, which are court proceedings to determine the extent and priority of water rights in an entire river system. For information regarding water uses and watersheds affected by these adjudications, and the forms upon sale of the property, contact the Department of Water Resources at www.azwater.gov/dwr/Content/Find_by_Program/Adjudications/default.htm

Additionally, the Verde Valley Water Users assists members in matters pertaining to the Gila River System Adjudication. www.verdevalleywaterusers.org/

Soil Problems

The soil in some areas of Arizona has "clay-like" tendencies, sometimes referred to as "expansive soil." Other areas are subject to fissures, subsidence and other soil conditions. For additional information on earth fissures, visit www.azwater.gov/dwr/Content/Hot_Topics/Earth_Fissures_in_Arizona/Earth_Fissures_in_Arizona.pdf. Properties built on such soils may experience significant movement causing a major problem. If it has been disclosed that the property is subject to any such soil conditions or if the buyer has any concerns about the soil condition or observes evidence of cracking, the buyer should secure an independent assessment of the property and its structural integrity by a licensed, bonded, and insured professional engineer. To investigate areas in Arizona where expansive soils exist, go to www.az.nrcs.usda.gov (search "shrink/swell") or www.azgs.az.gov ("Geologic Hazards"). A list of state certified professional engineers and firms can be found at www.btr.state.az.us.

Previous Fire/Flood

If it is disclosed there has been a fire or flood on the property, a qualified inspector should be hired to advise you regarding any possible future problems as a result of the fire or flood damage and/or any subsequent repairs. For example, if the property was not properly cleaned after a flood, mold issues may result. Your insurance agent may be able to assist you in obtaining information regarding fire, flood, or other past damage to the property.

Pests

Cockroaches, rattlesnakes, black widow spiders, scorpions, termites and other pests are common in parts of Arizona. Fortunately, most pests can be controlled with pesticides. Scorpions, on the other hand, may be difficult to eliminate. If the buyer has any concerns or if the SPDS indicates the seller has seen scorpions or other pests on the property, you should seek the advice of a pest control company. A source of information on scorpions may be found at www.desertusa.com/oct96/du_scorpion.html.

For information on roof rats, which have been reported in some areas, go to www.maricopa.gov/envsvc/WATER/VECTOR/roofrats.asp.

For information on termites or bark beetles, which have been reported some forested areas, see www.sb.state.az.us/.

Endangered and Threatened Species

Certain areas in the state may have issues related to federally listed endangered or threatened species that may affect land uses. Further information may be obtained by going to the following U.S. Fish and Wildlife website, www.fws.gov/arizonaes, or contact the appropriate planning/development service department.

Deaths and Felonies on the Property

An Arizona law states that sellers and real estate licensees have no liability for failure to disclose to a buyer that the property was ever the site of a natural death, suicide, murder or felony; see www.azleg.state.az.us/ars/32/02156.htm. This information is often difficult

October 2006 6 Initials _________ / __________

to uncover; however, the local law enforcement agency may be able to identify calls made to the property address.

Mold

Mold has always been with us, and it is a rare property that does not have some mold. However, over the past few years a certain kind of mold has been identified as a possible contributor to illnesses. Allergic individuals may experience symptoms related to mold. Mold growth is found underneath materials where water has damaged surfaces, or behind walls. A pamphlet, Mold in my Home: What Do I Do?, prepared by the Arizona Department of Health Services, Office of Environmental Health, states: "If you can see mold, or if there is an earthy or musty odor, you can assume you have a mold problem." www.hs.state.az.us/phs/oeh/invsurv/air_qual/mold_contents.htm

The Environmental Protection Agency (EPA) and Centers for Disease Control and Prevention websites also contain valuable information: www.epa.gov/iaq/molds/moldresources.html and www.cdc.gov/mold/default.htm.

Other Indoor Air Quality Concerns

Radon gas and carbon monoxide poisoning are two of the more common and potentially serious indoor air quality ("IAQ") concerns. Both of these concerns can be addressed by the home inspector, usually for an additional fee. As for the many other IAQ concerns, the EPA has a host of resource materials and pamphlets available at www.epa.gov/iaq/iaqinfo.html and www.epa.gov/iaq/pubs/index.html.

Property Boundaries

If the property boundaries are of concern, a survey may be warranted. For example, a survey may be advisable if there is an obvious use of property by others (i.e., a well-worn path across a property and/or parked cars on the property) or fences or structures of adjacent property owners that appear to be built on the property. For more information, visit the Arizona Professional Land Surveyors website at www.azpls.org. A list of surveyors may be obtained from the Board of Technical Registration at www.btr.state.az.us.

Flood Plain Status

If the property is in a flood zone, an additional annual insurance premium of several hundred dollars may be required (check with your insurance agent about cost and coverage). If the property is in an area deemed high risk, the buyer may be required by the lender to obtain flood hazard insurance through the National Flood Insurance Program. Find details on flood plain status at:

Maricopa County: www.fcd.maricopa.gov/Maps/

Pima County: www.rfcd.pima.gov

Other parts of the state: www.azgs.state.az.us/flood_links.htm

FEMA´s Flood Map Service Center: www.fema.gov/hazard/flood/index.shtm

Insurance (Claims History)

Many factors affect the availability and cost of homeowner´s insurance. Depending on the insurance company, these factors may include past insurance claims filed on the property being purchased, past insurance claims filed by the buyer on previous properties, and the buyer's credit score. Some insurance companies use a database known as the Comprehensive Loss Underwriting Exchange ("C.L.U.E.") in their underwriting practices to track the insurance claim history of a property and of the person applying for insurance coverage.

To reduce the risk of insurance cancellation, a buyer should ask their insurance agent about the company's underwriting practices and request that their insurance agent confirm in writing the availability and cost of insurance early in any real estate transaction. Although a buyer cannot directly obtain the claims history of a property, a buyer may ask the seller to provide a copy. However, be aware that obtaining a claims history or C.L.U.E. report on a property will not give a buyer all the necessary information to determine insurability, since not all insurance companies use this information or use it in the same manner.

Property owners may request a five year claims history from their insurance agent or purchase a C.L.U.E. report online at www.choicetrust.com or by calling 866-527-2600. For more detailed information on homeowner's insurance, please read "The New Reality of Property Insurance - What You Should Know" at www.aaronline.com/documents/insurance.pdf.

For additional insurance information or to file a complaint against an insurance company, visit the Arizona Department of Insurance website at www.id.state.az.us/

October 2006 7 Initials _________ / __________

Other Property Conditions

Plumbing: Check functionality. Also, a national class action suit has been settled, providing relief for qualifying leaks in polybutylene pipes (PB). For more information, see www.pbpipe.com or www.aaronline.com/documents/polyb.aspx.

Cooling/Heating: Make sure the cooling and heating systems are adequate. Arizona State Chapter affiliate of the Air Conditioning Contractors of America: www.acca-az.org/. As of 1/23/06, manufacturers that produce residential air conditioners and heat pumps must meet the new government minimum standard of 13 seasonal energy efficiency rating or "SEER" standard for residential central air conditioners. Check with a licensed contractor and your home warranty company about the implications of this requirement.

Electrical systems: Check for function and safety.

Every property is unique; therefore, important conditions vary.

Environmental Concerns

It is often very difficult to identify environmental hazards. For environmental information, search the ADEQ website at www.adeq.state.az.us. The ADEQ website contains information regarding the locations of open and closed landfills (Solid Waste Facilities) at www.adeq.state.az.us/environ/waste/solid/other.html and wildfire information at www.adeq.state.az.us/function/about/wildfire.html,

as well as air quality information, water quality information and more.

Electromagnetic Fields

For information on electromagnetic fields and whether they pose a health risk to you or your family visit the following websites: www.niehs.nih.gov/emfrapid/booklet/home.htm www.cancer.org/docroot/NWS/content/NWS_1_1x_Electromagnetic_Fields_and_Cancer_Risk_.asp http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=31421

Superfund Sites

There are numerous sites in Arizona where the soil and groundwater have been contaminated by improper disposal of contaminants. To check if a property is in an area designated by the ADEQ as requiring cleanup, see www.adeq.state.az.us/environ/waste/sps/phx.html for available maps to view. The EPA also has information on Federal sites at www.epa.gov/superfund/spanish/index.htm (Spanish).

Freeway Construction and Traffic Conditions

Although the existence of a freeway near the property may provide highly desirable access, sometimes it contributes to undesirable noise. To search for roadway construction and planning, go to the Arizona Department of Transportation ("ADOT") website at www.azdot.gov/Highways/. Check ADOT maps to find the nearest future freeway routes and roads in the area slated for widening. For traffic conditions, visit www.az511.com/.

Crime Statistics

Crime statistics, while an imperfect measurement at best, nevertheless provide some indication of the level of criminal activity in an area. To check the crime statistics for the cities of Phoenix, Tempe, Glendale, Mesa, Scottsdale, Chandler, Gilbert and Peoria, go to www.faxnet1.org. A visit or phone call to other law enforcement agencies may be required. For a list of all Arizona city links, go to www.azleague.org. To find crime statistics on their websites, you may need to search for "crime statistics."

Sex Offenders

Since June 1996, Arizona has had a registry and community notification program for convicted sex offenders. This information may be accessed at www.azsexoffender.org. Prior to June 1996, registration was not required, and only the higher-risk sex offenders are on the website. The presence of a sex offender in the vicinity of the property is not a fact that the seller or real estate agent is required to disclose.

Military and Public Airports

The legislature has mandated the identification of areas in the immediate vicinity of military and public airports that are susceptible to a certain level of noise from aircraft. The boundaries of these areas have been plotted on maps that are useful in determining if a property falls within one of these

October 2006 8 Initials _________ / __________

areas. The map for military airports may be accessed at www.azre.gov/PUBLIC_INFO/Airport_Maps/Territory_in_the_Vicinity_of_a_Military_Airport.html; view maps for many of the public airports at www.azre.gov/PUBLIC_INFO/Airport_Maps/Territory_in_the_Vicinity_of_a_Public_Airport.html. These maps are intended to show the areas subject to the preponderance of airport-related noise from a given airport. Periodic over-flights that may contribute to noise cannot usually be determined from these maps.

Forested Areas

Life in a forested area has unique benefits and concerns. For information on protecting your property from wildfire, go to www.firewise.org/ or www.land.state.az.us/divisions/fire.htm. See also Arizona Firewise Communities, http://cals.arizona.edu/firewise/. Contact county/city fire authority for information on issues particular to your community.

Zoning/Planning/Neighborhood Services

Phoenix: www.phoenix.gov/PLANNING/index.html

Scottsdale: www.scottsdaleaz.gov/Topic.asp?catID=1

Tucson: www.ci.tucson.az.us/planning.html

Other cities and towns: www.azleague.org

Schools

Although there is no substitute for an on-site visit to the school to talk with principals and teachers, there is a significant amount of information about Arizona´s schools on the Internet. Public and charter school information may be accessed at www.ade.state.az.us. The ADRE advises: "Call the school district serving the subdivision to determine whether nearby schools are accepting new students. Some school districts, especially in the northwest part of the greater Phoenix area, have placed a cap on enrollment. You may find that your children cannot attend the school nearest you and may even be transported to another community." www.azre.gov/PUBLIC_INFO/Documents/Property_Buyer_Checklist.html

Talk to the Neighbors

Neighbors can provide a wealth of information. Buyers should always talk to the surrounding residents about the neighborhood and the history of the property the buyer is considering for purchase.

Drive around the Neighborhood

Buyers should always drive around the neighborhood, preferably on different days at several different times of the day and evening, to investigate the surrounding area.

Links to state agencies, city and county websites: www.az.gov

Maps and information based on address (Geographic Information System): www.az.gov/webapp/govinfo/main.do

The Fair Housing Act prohibits discrimination in the sale, rental, and financing of dwellings based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and handicap (disability). For more information, visit HUD´s Fair Housing/Equal Opportunity website at www.hud.gov/groups/fairhousing.cfm. For information on the Americans with Disabilities Act, visit www.usdoj.gov/crt/ada/adahom1.htm. For the Arizona Office for Americans with Disabilities, visit www.azada.gov.

Arizona Association of REALTORS® ("AAR"): www.aaronline.com (Consumer Assistance)

Arizona Department of Real Estate ("ADRE"): www.azre.gov/ (Consumer Information)

NATIONAL ASSOCIATION OF REALTORS® ("NAR"): www.realtor.com October 2006 9 Initials _________ / __________

NAR´s Ten Steps to Homeownership:

Arizona Department of Real Estate

BUYER ADVISORY

Provided by the Arizona Association of REALTORS®

BUYER ACKNOWLEDGMENT

Buyer acknowledges receipt of all nine pages of this Advisory. Buyer further acknowledges that there may be other disclosure issues of concern not listed in this Advisory. Buyer is responsible for making all necessary inquiries and consulting the appropriate persons or entities prior to the purchase of any property.

The information in this Advisory is provided with the understanding that it is not intended as legal or other professional services or advice. These materials have been prepared for general informational purposes only. The information and links contained herein may not be updated or revised for accuracy. If you have any additional questions or need advice, please contact your own lawyer or other professional representative.

Buyer´s Signature MO/DA/YR

Buyer´s Signature MO/DA/YR