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Thank You for contacting me about information on the short sale process and allowing me the exciting opportunity to help you sell your home as a short sale.

I have made this sweet presentation to help answer your questions about the short sale

process. What is a Short Sale?

Who Qualifies For a Short Sale?

What Will Be Required of You?

What Should You Expect in the Process?

What are the Benefits of a Short Sale?

Why Working With Your Real Estate Agent is a Great Decision?

Answers to Frequent Questions

A Short Sale is when your mortgage lender(s) and/or lien holder(s)

agree

to take less than is owed so

that you can sell your home.

Your home may be over-leveraged or “underwater”

You may behind on payments and cannot sell for high enough to cover what you owe plus other required fees to close.

Lenders created short sales as a foreclosure alternative

Lenders would rather allow you to short sale versus foreclosing.

Foreclosing on properties costs lenders money

Most people facing foreclosure or a financial hardship who cannot sell

their home for what is owed

will qualify.

However, each Lender and Loan Type has

a different set of requirements.

Please be sure to tell your agent: Your Lender & Loan Type

This information can be found on a current mortgage statement or the settlement papers from your closing.

If you do not know the loan type and lender, be sure to give your agent authorization to call your lender.

In General, to Qualify you must simply:

Be experiencing a Financial Hardship

Be in default OR imminent default on your mortgage

Facing imminent default while in a ‘Must Sell’ situation

Have NO Equity in your home

First and Foremost:

Get Your Property Listed for Sale

at fair market value

Your Lender will require copy of a Listing Agreement.

Your Lender wants to see that you have made a good effort to sell your home

Your Lender Will Require the following:

Handwritten Hardship LetterExplain your situation, when it started, how it happened and what you are doing to fix it

A Financial Worksheet- Your Budget

Everything that costs you money on a monthly basis

2 Years Most Recent Tax ReturnsWith W-2s

2 Months Recent Bank StatementsAll accounts and all pages

2 Most Recent Pay-StubsOr, if unemployed, a statement stating such

Your Short Sale Team Will Require the following:

An Authorization to Release Information to your Listing Agent and Attorney

Copy of recent mortgage statement(s)

Copy of any correspondence received regarding the property from attorneys, lien holder(s), bankruptcy trustee, or probate.

Any paperwork regarding any other liens and/or judgments.

Property tax records HOA information and recent

statement

Short Sale Success will be easier if you assist with the process.

Allow showings

Keep the home show-able

Stay available for your agent

Stay in communication with your agent

Cooperate with marketing efforts

If vacant: leave on utilities

The Process could take weeks or months to complete. Patience and Communication are the keys to

SWEET success.

1. Home is Marketed by your Realtor

2. Purchase Offer Received by your Realtor

3. Short Sale Package Submitted to your lender by attorney

4. Bank Orders Appraisal

5. Negotiations-By your Short Sale Negotiation Team

6.Property is Sold

URGENT MESSAGE

If you are scheduled for a foreclosure sale date there is no need to PUCKER up and cry. Just be sure that I am immediately aware of the situation and provide me with any foreclosure paperwork you

have.

I Know this Market as I am a Full- time Professional Realtor

Have all the Required Disclosure Forms

I Know how to get your home SOLD!!

I work with a team of Short Sale Experts

I am Ethically Obligated to Protect Your Interests

How much time do I have? Do I have to start now?It is best to begin a short sale when you realize you can no longer afford the mortgage, so that your property can be marketed properly and you can receive a high offer. The earlier you start, the higher our likelihood of success. Remember that your lender requires a purchase offer to review your eligibility for a short sale and it make a few weeks to get a solid offer.

Do I need to be in default to qualify for a short sale?NOT N, more and more lenders are considering short sale requests from homeowners who are not in default. However, you must be experiencing a financial hardship that points to imminent default if you are unable to sell.

What will happen If I do nothing?If you do nothing and are not making your mortgage payments, your lender will most likely foreclose. You may have a foreclosure on your credit report, be liable for any deficiency, and/or subject to a taxable event depending on your financial situation.

Will I get any money when the property sells?NO, for the majority of loan types you are not allowed by your lender to receive any proceeds from the sale of your home. If you have an FHA loan, you may qualify for their pre-foreclosure sale program that does have a selling incentive.

What if I file bankruptcy?Filing bankruptcy will not stop the foreclosure process, just delay it. The property will eventually be discharged from bankruptcy protection and be back in the foreclosure process where it was when bankruptcy was filed. For further bankruptcy information, please seek the advice of legal counsel.

What is better on my credit – Foreclosure or Short Sale?Please consult your own financial advisor or the credit bureaus directly for the answer to this question. From experience only, we can say that foreclosure is much more damaging to your credit. A short sale will most commonly be listed as “settled debt” and is much less harmful to your credit.

Will I be liable for my lender’s financial loss?

Depending on your situation you may or may not receive a deficiency judgment or taxable event. It is best to consult an attorney for advice regarding any debt liability.

Now, there have been recent changes in the law that reduce homeowner tax liability. The site for that information is http://www.irs.gov/individuals/article/0,,id=179414,00.html Most tax consequences have been done away with for primary loans on primary residences.

Regarding deficiencies – you can have your Real Estate Attorney request in the negotiations a full release of lien and that your lender consider the debt settled or satisfied. The bank has the right to ask you to sign an unsecured note or to ask you contribute money at the time of closing. Be sure your agent negotiates the best outcome for you..

What other advice should I seek?Be smart. Always seek professional advice from a qualified attorney and an accountant specializing in Short Sales/Pre-Foreclosure Sales.

What about the federal government bailout programs?To determine your eligibility, please visit www.financialstability.gov

Please call

Shaunna Patterson 623.218.3341

For more Information or to schedule your Complimentary Short Sale Listing Consultation.

We make no assurances or guarantees asto the information contained herein or the outcome for your property.

On Q Financial, Inc. Arizona #BK-0906866| NMLS#5645 . On Q Financial is a Equal Housing Lender. Loan approval is subject to appli-cants qualification for loan program. On Q Financial does not guarantee that each applicant will receive a loan.

Jason Servais

Senior Mortgage Consultant-AVP NMLS #25381/LO #0918518

602-308-8565 Direct 602-410-2118 Mobile

www.theservaisgroup.com jason@theservaisgroup.com

Call Jason at 602-308-8565

*Please consult an On Q Financial Mortgage Consultant for further information and questions pertaining to specific guidelines and requirements by the investor. Exceptions to time periods above may apply. Working with a lender that can adapt to the changing industry quickly and effectively is a win, win for all! Feel free to contact me with any questions.

Occurrence Fannie Mae FHA VA USDA Rural Jumbo*

Foreclosure

7 years from Trust Deed Date

3 Years from Trust Deed Date

2 years from Trust Deed Date

3 Years from Trust Deed Date

7 Years from Trust Deed Date

Short Sale

2 Years with max 80% LTV 4 Years with max 90% LTV

7 Years - Max LTV

3 Years from Completion Date

*Per FHA ML 09-52, FHA financing can be obtained in less than 3 years under cer-

tain conditions*

No specific information on the yet, assume foreclosure

rule of 2 years

3 Years from Completion Date

7 Years from Completion Date

CHPT 7 Bankruptcy

4 Years from Discharge Date

2 Years from Discharge Date

2 Years from Discharge Date

3 years from Discharge Date

7 Years from Completion Date

CHPT 13 Bankruptcy

4 years from Discharge Date

1 year of the payout must elapse & payment perform-ance must be satisfactory;

buyer must receive permis-sion from the court to enter

into a mortgage

1 year of the payout must elapse & payment perform-ance must be satisfactory;

buyer must receive permis-sion from the court to enter

into a mortgage

3 years from the Discharge Date

7 Years from the Discharge Date

SHORT SALE TIMELINE OVERVIEW

Generally, we are not able to know how long the third party approval

process will take. With the current market conditions, and the sheer volume

of short sales being processed we will not be able to quote a time, since once

the file is submitted to the lender many circumstances are out of our control.

However the following guidelines are basic ideas from our past experience,

these may VARY GREATLY depending on the account rep holding the file

and this is not intended to be used as a reference but for informational and

educational purposes only.

Although every bank is different, the entire process typically takes 45-90+

business days from the date the offer is submitted to obtain an approval

letter. Every bank operates their loss mitigation department differently.

Please know that often times the lenders have specific guidelines that will

need to be met, and we may not be made aware of these guidelines prior to

offer submission.

If changes need to be made, we will inform you immediately

Keep in mind if the property has multiple lien holders this process must

be completed with ALL of them. Also first lien holder and junior lien

holder must come to agreeable terms for the short pay off as well.

Prior to Listing Home:

Homeowner must complete a consultation with licensed Real

Estate Attorney and attorney must complete the required

attorney release form before we can initiate the short sale

process.

Weeks 1-3

Once an offer is received– Within 5 Business Days of Receipt of Offer- Seller

Financials, Contract and HUD is submitted to the Bank

72 Hours Later– we will follow up to make sure package was received and

Processed into Bank systems, (Usually takes banks this long to enter into the

system).

Assigned to a Loss Mitgator: Account Rep at the bank for this transaction.

Weeks 3-6

Lender orders BPO or Appraisal: I will try to get time line on when the

Appraisal or BPO (Broker Price Opinion) will be ordered so the bank knows the

current market value of the home. Depending on the bank 1-3 independent BPOs

may be conducted.

Weeks 6-8 Lender, VA, FHA, Investor review: All parties holding a vested interest in the

property will review the offer to purchase vs. market value to determine if the

offer is within guidelines to approve the sale. The bank will notify us if the offer

needs

to be re-negotiated, i.e., if they will pay for home warranty, HOA fees.

Approval Letter: Bank will issue the seller with an Approval Letter. Seller

will have 48 hours to approve or reject the terms.

Weeks 8-12

Be advised that if applicable the Junior Lien holder approval letter is required

to proceed before next step.

Agreement Notice: As per short sale addendum, Seller will provide Buyer with

an agreement notice. This notice will state the Close of Escrow date, and all time

periods such as the Buyer’s inspection period will begin.

Escrow opened– proceed as normal on the banks timeline for Close of Escrow.

Utilities / Inspections: Please be advised that the AAR Residential

Purchase Contract states that the Seller is to provide utilities for the buyers

to complete inspections and a walk through until the day of closing.

Updates: All Parties to the transaction will receive a weekly

update from our Attorney Partners outlining the progress

of your transaction.

Seller Due Diligence Disclosure

Tax Attorney: Marianne Kingman 2355 E. Camelback Rd. Phoenix, AZ. 85016 602-954-2410 Real Estate Attorney/Short Sale Negotiation: Douglas Edmunds

1425 South Higley Road Suite 104 Gilbert, AZ 85296

(480) 603-4988 Phone

(480) 603-4989 Fax

www.EdmundsLawAZ.com

**To Schedule Short Sale Attorney Consultation** Sherry Nickels Direct: (602) 456-9634 Mobile: (480) 285-9079 eFax: (602) 288-1564 Real Estate Attorney: Dax Watson 3200 N Central Ave Ste. 1200 (602) 778-9900 Phone (602) 778-9947 Fax info@mackazlaw.com Real Estate Attorney: Stein Law, PLC Scott J. Stein, Attorney 480-889-8948 office www.steinlawplc.com Consumer Credit Counsel: 602-246-2227

Bankruptcy Attorney: Aaron Greene 2200 East Camelback Road# 221 Phoenix, Arizona 85016 Phone: (602) 957-9810 Fax: (602) 955-4712 info@combslawgroup.com CPA: Patrick Thatcher Thatcher Financial 13020 W. Rancho Santa Fe Blvd 103 Avondale, AZ 85392 Phone: (623)925-2577 admin@thatcherfinancial.com Each seller(s) understands that their lender offer (Acceptance Requirement’s) may have some tax, legal and credit consequences that are unacceptable to the seller. The seller(s) have been advised by the listing broker to contact professionals or any legal, tax and credit professional before, during and prior to submitting the bank acceptance to the buyer, that they are in agreement with the terms in the acceptance letter. Broker’s disclosing of the above mentioned or any other person or entity to Owner is intended for any purpose. Such disclosure shall be independently investigated and Evaluated by Owner, who hereby acknowledges that any decision to enter into any Contractual arrangement with any such person or entity disclosed by Broker will be based solely upon such independent investigation and evaluation and should not be interpreted as a recommendation or endorsement of any such party. Disclaimer: Seller acknowledges that Broker is not qualified to provide financial, legal or tax advice regarding a short sale transaction. Therefore, the Seller is advised to obtain professional tax advice and consult independent legal counsel immediately regarding the tax implications and advisability of entering into a short sale agreement.

Frequently Asked Questions and Answers

What is a short sale? A short sale is when your Lien Holder(s) agree to accept less than you owe in order for you to sell your home. They agree to a discount of the mortgage debt owed.

Why do lenders or banks accept discounts? A Lender or bank takes a discount or agrees a short sale because it saves them money. It gets bad debt off their books so they can reinvest that money by giving out another loan to a customer. On average a Lender loses between $30,000 to $80,000 on each property that they take back as a bank owned property. In many cases a short sale is necessary in order to get you out from under your mortgage debt. By doing a short sale, you will be able to take a large bite out of the money you owe to your mortgage company, so that you are no longer liable for the entire amount.

Will every lender or bank allow a short sale? The answer is no. The majority of the lenders do short sales however; there are a select few that do not do short sales.

Who qualifies for a short sale? Most everyone who is facing a true financial hardship qualifies for a short sale. However, each Lender and Loan Type has a different set of requirements specific to them. The general requirements for a seller to qualify for a short sale are: A provable financial hardship, behind on payments or facing imminent default, No equity in the property being shorted, no liquid assets, and a lender or loan type with a clearly defined short sale process.

How do I know what type of loan I have? Knowing what type of loan you have is crucial to the process. There is often specific short sale Requirements unique to each loan type. You can find this information by looking at your mortgage Statement, the settlement papers from when you originally purchase the property, or by calling your Lender.

Will Lenders or Banks do short sales if the mortgage is current? Some Lenders will entertain taking a discount when a homeowner is current on their mortgage however They typically require the property to be listed for sale by a licensed real estate agent.

How long do I need to be in default before I can start a short sale? This depends on the Lender. Some Lenders require a property to be 90 days in default before they will Entertain a short sale offer; other Lenders will entertain a short sale even if it is not in default.

What is required to process a short sale? Every Lender or Bank has its own set of required information and some may even have a set of paperwork specific to them. But, in general, most banks require at least the following: A handwritten hardship letter, financial statements, 2 years tax returns, 2 months bank statements, 2 months paystubs, and that you have the property listed for sale at fair market value. Throughout the process additional paperwork may be requested. So, be sure to keep everything handy.

Why should I give you my mortgage information? It is impossible for us to negotiate with your Lender without some basic information. Plus we are willing to put our time and energy into your property in order to assist you which we cannot do without your help. Rest assured, the information that you provide us is confidential and will not be shown to anyone but your attorney and the foreclosing lender.

Is my information secure? Yes. We protect your documents and privacy as we would our own.

What is the process? The steps and process of a short sale can be broken into 9 main steps. The most important parts of the process for you are to help in the beginning to gather the paperwork required and to help list and sell your home. As your short sale is negotiated, you will be provided regular updates throughout the process.

How long does a typical short sale take? Depending on what state you are from, this answer will vary. The short sale time-line is subject to your Lender or Bank. Many banks are overwhelmed right now with short sale requests. However, most do have an understandable review process. Unnecessary delays can be avoided by not sending incomplete short sale packages. Incomplete offers are often passed over or rejected. Your file is then closed and you would have to start over from the beginning. It is very important to be sure you provide everything required by your Lender and requested by the person helping you negotiate.

Can 2nd Mortgages or junior liens be discounted? Possibly!! In fact, if the first mortgage is being asked to accept a discount, they will require that all other lien holders discount as well in order to give short sale acceptance.

Can IRS tax liens be negotiated? Possibly!! Tax liens can be released from a property or reduced and paid at closing. Please consult the appropriate tax professionals for more information.

How will I know what is happening in the short sale process? If you provide an email address that you check daily, you will be given continuous e-mail notification each time something is done to your file, new paperwork is needed, notes are posted, or any progress is made.

Do I need to call my Lender? No. You are not required to call your lender.

What is an Authorization to Release? This gives the people negotiating on your behalf permission to talk with your lien holder(s).

A foreclosure sale date has been scheduled for my property. Can I still short sale my property? Possibly!! However, certain immediate steps may be necessary to get the foreclosure date postponed. You need to quickly complete the package of required forms, get your property listed right away, and cooperate wholly with your agent. A 3-way call to your lender may also be necessary to speed up authorization. There are no guarantees that there is enough time to get a postponement.

What is the foreclosure process? Contact Legal Counsel to receive information on the Foreclosure Process.

Will the foreclosure process stop when we submit a short sale offer to the lender? No. The foreclosure clock will continue to tick. Postponement requests can be made if necessary. Your Lender will only postpone foreclosure proceedings if they are certain a buyer will perform.

When should a default property that needs a discount be listed? Immediately. The Lender typically will not stop or slow down a foreclosure unless a property is listed for sale by a licensed real estate agent.

Must a property in default be listed? Yes and no. Some Lenders require a property to be listed when they take a short sale or short payoff. Ask the Foreclosing Lender, at the beginning of your short sale, whether you need the property listed.

I am not going to list the property that low…my neighbors’ house just sold 2 years ago for $50,000 more than that. I understand. However the market has changed and every property is different. There has been a reduction in the average value of comparable homes in your area and you must sell your home right away to avoid a possible foreclosure. To do this requires that you list your home at a price that will sell. Understand that Buyers will always look for the best deal. If your property is priced higher than competing homes, Buyers will pass it by.

I do not want to advertise the home as a short sale, pending foreclosure, or any other negative ownership conditions. I understand. Depending on your circumstances it may not be necessary to advertise your situation. However, you need to list the home at a price that is below what you owe. That means that all offers you receive must be contingent upon approval of a short sale. Our MLS (Multiple Listing Service) guidelines requiring that such contingencies be fully disclosed when we place your listing the the MLS. The remarks must, at the very least, include that the sale of the property is “Short Sale Lender Approval Required.”

Will all offers be contingent?

Yes. It is likely necessary to list your home for an amount that is less than you owe on your mortgage and not enough to cover all other associated fees. To sell requires short sale approval from your Lender or Bank. That makes all offers received subject to your Lien Holder(s) approval of a short sale.

I want my lender to consider the debt paid in full at closing. Can I include this request in the contingency? Yes. However, not all lenders will honor such requests. If this is important to you, be sure that a special stipulation clearly defining your request is included in all purchase offers.

Do we have to have a purchase offer to get short sale acceptance? Yes. Most lenders require that a short sale offer be submitted before they will even accept a short sale package, order an appraisal, and make their review. They typically will not spend the time and resources to review your situation unless they know that a buyer will perform.

What do I need to do to help sell the home? Be sure that you are doing as much as you’re able to help your agent sell your home. Keep the home show-able, stay in communication, be available to review or sign paperwork, support any of your agent’s marketing efforts, and keep the utilities on for Buyer inspections.

I cannot afford to make any repairs… When you are listing your property make sure your real estate agent adds the remarks “home to be sold AS-IS”. By doing this, Buyers will be aware that you cannot or will not make any improvements on the property. Be sure that your agent clearly expresses this to the Selling Agent and protects you in negotiations.

Can an immediate family member buy the home and I stay living here? Typically not. The foreclosing lender will not allow anyone to purchase the home through which you could become a direct beneficiary of the property and potentially resell for a profit. Furthermore, by allowing you the privilege of a short sale you are required to relinquish all use and benefit associated with the property.

My situation has changed and I can afford the monthly payments. Do I have other options? Yes. Be sure to research your options. Your agent may be able to assist you further.

Can I make any money on the sale of my property? A homeowner cannot accept money from the sale of their home if a Lender accepts a short payoff or a short sale. However, there are exceptions to this statement; for example an FHA (Federal Housing Authority) insured loan will allow a homeowner to receive up to $2,500.00 when taking a short payoff.

Will I need to bring money to closing? In most instances you will not but there are some lender’s that will require you bring a cash payement to the table, this will be determined during the short sale negotiations. A short sale is designed to assist the homeowner. All items due and payable at closing are meant to come from the Buyer’s funds. You will generally not have any out-of pocket costs to pay real estate commissions, closing costs, or any other items due and

payable at closing.

Do I have to pay any processing fees or real estate commissions if the short sale is not successful? If a ready, willing and able buyer is not found or if the Foreclosing Lender does not accept “an acceptable offer” then there will be no expenses due from the seller/homeowner. Contact your REALTOR® for clarification

I may file bankruptcy. Will this affect the short sale? Yes. Be sure that you inform your agent immediately upon making this decision. If you choose to file, please provide your agent with any paperwork involving the property that you receive from the Lender of bankruptcy trustee. For further information, please consult with a bankruptcy attorney.

What happens if the Bank or Lender counters the current offer? The Buyer will need to either increase their offer to meet that number or your agent will need to find another buyer that meets your Lender’s requirements.

Will filing bankruptcy STOP foreclosure? For further bankruptcy information, please seek the advice of legal counsel.

How does a bankruptcy affect my credit? Please consult a credit counselor or a major credit bureau for more information.

Regarding credit: Which is worse, a foreclosure or short sale? Please consult your own financial advisor or the credit bureaus directly for the answer to this question. From experience only, we can say that foreclosure can be much more damaging to your credit.

How many years after a successful short sale can I buy a house? There are new loan programs designed to help people who have recently had to short sale their home. You can apply for a home loan in as little as two years provided you have maintained your credit with good payment history, kept your debt-to-income ratios within lending guidelines, and have verifiable income.

If I let the bank foreclose on my house, how long until I can purchase another property? Unfortunately, there is no specific answer for it except to say that it could be a considerable amount of time (more than the 2 years on a successful short sale). Most lenders view your financial history as an indicator of what you will likely do in the future. If you missed several months of mortgage payments leading up to your foreclosure, then a lender will see you as a likely candidate to default on a future loan -- in other words, you are a big risk.

Will I receive a 1099 if my mortgage lender takes a discount? Yes it is an IRS code. The IRS code states that “a reduction of debt is a taxable event.” However, the Government has passed the Mortgage Debt Forgiveness Act (attached below). It states that for a certain period of time,some homeowners with primary loans on primary residences may be exempt from receiving a 1099.

Please click here for more information: http://www.irs.gov/individuals/article/0,,id=179414,00.html or consult a local tax attorney in your area for any changes or updates in reference to this Bill.

This is an investment property, not a primary residence. In this situation, will the reduction of debt be a taxable event? Yes it is an IRS code. Since the property is not a primary residence, you may not be eligible for an exemption. Please see the answer to the previous question and consult with a tax attorney.

Can I do a short sale on more than one property? Yes. You may short sale more than one property.

Someone told me that I can file as “insolvent” if I receive a 1099 from my lender? There are certain tax codes that enable someone in a financial hardship to be exempt from any tax liability outside of the exemptions already allowed in the Mortgage Debt Forgiveness Act. Please consult with a tax accountant for more information.

What if my lender requests a promissory note or money at closing? Your lender can make such requests. Whether or not you choose to agree must be a personal decision based upon your financial situation. Keep in mind that any amount requested by your Lender or Bank will likely be much less than they could potentially pursue from you as a deficiency judgment if the property were foreclosed upon.

What about the new federal government Bailout plan? To determine your eligibility, please visit: www.financialstability.gov

Will I need an accountant? We always recommend that everyone in your situation seek the advice of an accountant or other tax professional.

Do I need an attorney to represent me? It is always important to seek legal counsel when making these types of decisions.

I am behind on property taxes… These can be negotiated into the buyers offer and paid at closing. The payment of taxes owed will simply be another reduction in the amount paid to your Lender.

I have not paid my HOA dues… We will try to negotiate a discount for all current and past HOA dues and have them paid at closing from the funds to your Lender. Several lenders are not paying the HOA dues or transfer fees and requiring that the Seller come in with these costs at closing

Can I rent the property? We cannot advise you to or not to rent the property. Please consult a real estate attorney before making this

decision.

The property is vacant. Do I have to keep the utilities on? Yes. Per you listing agreement. However, if you cannot leave the utilities on you should consult with your agent to make arrangements to have them turned on for the buyers inspection.

When should I move out? Different loan types have requirements regarding occupancy that could affect your eligibility for a short sale. Before making the decision to move, be sure that you have talked with your Real Estate Attorney, Realtor and your Lender about your plans.

Can I take anything with me? Anything that you are going to take from the property needs to be clearly disclosed to any Buyers viewing the property. Be sure to leave all fixtures that traditionally remain in the sale of most homes, in working order.

The property is in bad condition…should I do anything? Extensive repairs or clean-up will be considered by potential buyers and reflected in the list price. Should some clean-up be necessary to assist in the sale of the home, your agent will make that request and work that out with you.

***For more information or to Schedule your Complimentary Short Sale

Listing Consultation please call 623.218.3341***

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable. The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition. More information, including detailed examples can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17. The following are the most commonly asked questions and answers about The Mortgage Forgiveness Debt Relief Act and debt cancellation: What is Cancellation of Debt? If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt. Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you. Is Cancellation of Debt income always taxable? Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:

Qualified principal residence indebtedness: This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners.

Bankruptcy: Debts discharged through bankruptcy are not considered taxable income. Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may

not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets.

Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your

income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.

Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences.

These exceptions are discussed in detail in Publication 4681. What is the Mortgage Forgiveness Debt Relief Act of 2007? The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007 (see News Release IR-2008-17). Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence. What does exclusion of income mean? Normally, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. But the Mortgage Forgiveness Debt Relief Act allows you to exclude certain cancelled debt on your principal residence from income. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. Does the Mortgage Forgiveness Debt Relief Act apply to all forgiven or cancelled debts? No. The Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes. In addition, the debt must be secured by the home. This is known as qualified principal residence indebtedness. The maximum amount you can treat as qualified principal residence indebtedness is $2 million or $1 million if married filing separately. Does the Mortgage Forgiveness Debt Relief Act apply to debt incurred to refinance a home? Debt used to refinance your home qualifies for this exclusion, but only to the extent that the principal balance of the old mortgage, immediately before the refinancing, would have qualified. For more information, including an example, see Publication 4681. How long is this special relief in effect? It applies to qualified principal residence indebtedness forgiven in calendar years 2007 through 2012. Is there a limit on the amount of forgiven qualified principal residence indebtedness that can be excluded from income? The maximum amount you can treat as qualified principal residence indebtedness is $2 million ($1 million if married filing separately for the tax year), at the time the loan was forgiven. If the balance was greater, see the instructions to Form 982 and the detailed example in Publication 4681. If the forgiven debt is excluded from income, do I have to report it on my tax return? Yes. The amount of debt forgiven must be reported on Form 982 and this form must be attached to your tax return.

Do I have to complete the entire Form 982? No. Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Adjustment), is used for other purposes in addition to reporting the exclusion of forgiveness of qualified principal residence indebtedness. If you are using the form only to report the exclusion of forgiveness of qualified principal residence indebtedness as the result of foreclosure on your principal residence, you only need to complete lines 1e and 2. If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of qualified principal residence indebtedness, complete lines 1e, 2, and 10b. Attach the Form 982 to your tax return. Where can I get this form? If you use a computer to fill out your return, check your tax-preparation software. You can also download the form at IRS.gov, or call 1-800-829-3676. If you call to order, please allow 7-10 days for delivery. How do I know or find out how much debt was forgiven? Your lender should send a Form 1099-C, Cancellation of Debt, by February 2, 2009. The amount of debt forgiven or cancelled will be shown in box 2. If this debt is all qualified principal residence indebtedness, the amount shown in box 2 will generally be the amount that you enter on lines 2 and 10b, if applicable, on Form 982. Can I exclude debt forgiven on my second home, credit card or car loans? Not under this provision. Only cancelled debt used to buy, build or improve your principal residence or refinance debt incurred for those purposes qualifies for this exclusion. See Publication 4681 for further details. If part of the forgiven debt doesn't qualify for exclusion from income under this provision, is it possible that it may qualify for exclusion under a different provision? Yes. The forgiven debt may qualify under the insolvency exclusion. Normally, you are not required to include forgiven debts in income to the extent that you are insolvent. You are insolvent when your total liabilities exceed your total assets. The forgiven debt may also qualify for exclusion if the debt was discharged in a Title 11 bankruptcy proceeding or if the debt is qualified farm indebtedness or qualified real property business indebtedness. If you believe you qualify for any of these exceptions, see the instructions for Form 982. Publication 4681 discusses each of these exceptions and includes examples. I lost money on the foreclosure of my home. Can I claim a loss on my tax return? No. Losses from the sale or foreclosure of personal property are not deductible. If I sold my home at a loss and the remaining loan is forgiven, does this constitute a cancellation of debt? Yes. To the extent that a loan from a lender is not fully satisfied and a lender cancels the unsatisfied debt, you have cancellation of indebtedness income. If the amount forgiven or canceled is $600 or more, the lender must generally issue Form 1099-C, Cancellation of Debt, showing the amount of debt canceled. However, you may be able to exclude part or all of this income if the debt was qualified principal residence indebtedness, you were insolvent immediately before the discharge, or if the debt was canceled in a title 11 bankruptcy case. An exclusion is also available for the cancellation of certain nonbusiness debts of a qualified individual as a result of a disaster in a Midwestern disaster area. See Form 982 for details.

If the remaining balance owed on my mortgage loan that I was personally liable for was canceled after my foreclosure, may I still exclude the canceled debt from income under the qualified principal residence exclusion, even though I no longer own my residence? Yes, as long as the canceled debt was qualified principal residence indebtedness. See Example 2 on page 13 of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Will I receive notification of cancellation of debt from my lender? Yes. Lenders are required to send Form 1099-C, Cancellation of Debt, when they cancel any debt of $600 or more. The amount cancelled will be in box 2 of the form. What if I disagree with the amount in box 2? Contact your lender to work out any discrepancies and have the lender issue a corrected Form 1099-C. How do I report the forgiveness of debt that is excluded from gross income? (1) Check the appropriate box under line 1 on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to indicate the type of discharge of indebtedness and enter the amount of the discharged debt excluded from gross income on line 2. Any remaining canceled debt must be included as income on your tax return. (2) File Form 982 with your tax return. My student loan was cancelled; will this result in taxable income? In some cases, yes. Your student loan cancellation will not result in taxable income if you agreed to a loan provision requiring you to work in a certain profession for a specified period of time, and you fulfilled this obligation. Are there other conditions I should know about to exclude the cancellation of student debt? Yes, your student loan must have been made by: (a) the federal government, or a state or local government or subdivision; (b) a tax-exempt public benefit corporation which has control of a state, county or municipal hospital where the employees are considered public employees; or (c) a school which has a program to encourage students to work in underserved occupations or areas, and has an agreement with one of the above to fund the program, under the direction of a governmental unit or a charitable or educational organization. Can I exclude cancellation of credit card debt? In some cases, yes. Nonbusiness credit card debt cancellation can be excluded from income if the cancellation occurred in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See the examples in Publication 4681. How do I know if I was insolvent? You are insolvent when your total debts exceed the total fair market value of all of your assets. Assets include everything you own, e.g., your car, house, condominium, furniture, life insurance policies, stocks, other investments, or your pension and other retirement accounts.

How should I report the information and items needed to prove insolvency? Use Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to exclude canceled debt from income to the extent you were insolvent immediately before the cancellation. You were insolvent to the extent that your liabilities exceeded the fair market value of your assets immediately before the cancellation. To claim this exclusion, you must attach Form 982 to your federal income tax return. Check box 1b on Form 982, and, on line 2, include the smaller of the amount of the debt canceled or the amount by which you were insolvent immediately prior to the cancellation. You must also reduce your tax attributes in Part II of Form 982. My car was repossessed and I received a 1099-C; can I exclude this amount on my tax return? Only if the cancellation happened in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See Publication 4681 for examples. Are there any publications I can read for more information? Yes. (1) Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) is new and addresses in a single document the tax consequences of cancellation of debt issues. (2) See the IRS news release IR-2008-17 with additional questions and answers on IRS.gov.

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Department of the TreasuryInternal Revenue Service2011

Instructions for Forms1099-A and 1099-C

Multiple owners of a single loan. If there are multiple owners ofSection references are to the Internal Revenue Code unlessundivided interests in a single loan, such as in pools, fixedotherwise noted.investment trusts, or other similar arrangements, the trustee, recordowner, or person acting in a similar capacity must file Form 1099-Aon behalf of all the owners of beneficial interests or participations.What’s New In this case, only one form for each borrower must be filed onbehalf of all owners with respect to the loan. Similarly, for bondPilot program for truncating an individual’s identifying number issues, only the trustee or similar person is required to report.on paper payee statements has ended. Filers of Forms 1099-AGovernmental unit. A governmental unit, or any of its subsidiaryand 1099-C must show the borrower’s or debtor’s completeagencies, that lends money secured by property must file Formidentifying number on all copies of the form.1099-A.Subsequent holder. A subsequent holder of a loan is treated as aReminderlender and is required to report events occurring after the loan is

In addition to these specific instructions, you should also use the transferred to the new holder.2011 General Instructions for Certain Information Returns (Forms

Multiple lenders. If more than one person lends money secured1097, 1098, 1099, 3921, 3922, 5498, and W-2G). Those generalby property and one lender forecloses or otherwise acquires aninstructions include information about the following topics.interest in the property and the sale or other acquisition terminates,• Backup withholding.reduces, or otherwise impairs the other lenders’ security interests in• Electronic reporting requirements.the property, the other lenders must file Form 1099-A for each of• Penalties.their loans. For example, if a first trust holder forecloses on a• Who must file (nominee/middleman).building, and the second trust holder knows or has reason to know• When and where to file.of such foreclosure, the second trust holder must file Form 1099-A• Taxpayer identification numbers.for the second trust even though no part of the second trust was• Statements to recipients.satisfied by the proceeds of the foreclosure sale.• Corrected and void returns.

• Other general topics. AbandonmentYou can get the general instructions from IRS.gov or by calling An abandonment occurs when the objective facts and

1-800-TAX-FORM (1-800-829-3676). circumstances indicate that the borrower intended to and haspermanently discarded the property from use. You have “reason toknow” of an abandonment based on all the facts and circumstancesconcerning the status of the property. You will be deemed to knowSpecific Instructions for Form 1099-Aall the information that would have been discovered through aFile Form 1099-A, Acquisition or Abandonment of Securedreasonable inquiry when, in the ordinary course of business, youProperty, for each borrower if you lend money in connection withbecome aware or should become aware of circumstancesyour trade or business and, in full or partial satisfaction of the debt,indicating that the property has been abandoned. If you expect toyou acquire an interest in property that is security for the debt, orcommence a foreclosure, execution, or similar sale within 3 monthsyou have reason to know that the property has been abandoned.of the date you had reason to know that the property wasYou need not be in the business of lending money to be subject toabandoned, reporting is required as of the date you acquire anthis reporting requirement.interest in the property or a third party purchases the property atsuch sale. If you expect to but do not commence such action withinCoordination With Form 1099-C3 months, the reporting requirement arises at the end of the

If, in the same calendar year, you cancel a debt in connection with 3-month period.a foreclosure or abandonment of secured property, it is notnecessary to file both Form 1099-A and Form 1099-C, Cancellation Statements to Borrowersof Debt, for the same debtor. You may file Form 1099-C only. You If you are required to file Form 1099-A, you must provide awill meet your Form 1099-A filing requirement for the debtor by statement to the borrower. Furnish a copy of Form 1099-A or ancompleting boxes 4, 5, and 7 on Form 1099-C. However, if you file acceptable substitute statement to each borrower. For moreboth Forms 1099-A and 1099-C, do not complete boxes 4, 5, or 7 information about the requirement to furnish a statement to theon Form 1099-C. See the instructions for Form 1099-C on page 2. borrower, see part M in the 2011 General Instructions for Certain

Information Returns.PropertyProperty means any real property (such as a personal residence), Account Numberany intangible property, and tangible personal property except: The account number is required if you have multiple accounts for a

borrower for whom you are filing more than one Form 1099-A.• No reporting is required for tangible personal property (such as aAdditionally, the IRS encourages you to designate an accountcar) held only for personal use. However, you must file Formnumber for all Forms 1099-A that you file. See part L in the 20111099-A if the property is totally or partly held for use in a trade orGeneral Instructions for Certain Information Returns.business or for investment.

• No reporting is required if the property securing the loan is Box 1. Date of Lender’s Acquisition orlocated outside the United States and the borrower has furnishedthe lender a statement, under penalties of perjury, that the borrower Knowledge of Abandonmentis an exempt foreign person (unless the lender knows that the For an acquisition, enter the date you acquired the securedstatement is false). property. An interest in the property generally is acquired on the

earlier of the date title is transferred to the lender or the dateWho Must File possession and the burdens and benefits of ownership areIn addition to the general rule specified above, the following transferred to the lender. If an objection period is provided by law,rules apply. use the date the objection period expires. If you purchase the

Cat. No. 27991U

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property at a sale held to satisfy the debt, such as at a foreclosure Coordination With Form 1099-Aor execution sale, use the later of the date of sale or the date the

If, in the same calendar year, you cancel a debt of $600 or more inborrower’s right of redemption, if any, expires.connection with a foreclosure or abandonment of secured property,

For an abandonment, enter the date you knew or had reason to it is not necessary to file both Form 1099-A, Acquisition orknow that the property was abandoned unless you expect to Abandonment of Secured Property, and Form 1099-C for the samecommence a foreclosure, execution, or similar action within 3 debtor. You may file Form 1099-C only. You will meet your Formmonths, as explained earlier. If a third party purchases the property 1099-A filing requirement for the debtor by completing boxes 4, 5,at a foreclosure, execution, or similar sale, the property is treated and 7 on Form 1099-C. However, you may file both Forms 1099-Aas abandoned, and you have reason to know of its abandonment and 1099-C; if you do, do not complete boxes 4, 5, or 7 on Formon the date of sale. 1099-C. See the instructions for Form 1099-A on page 1 and Box 4,

Box 5, and Box 7 on page 4.Box 2. Balance of Principal OutstandingEnter the balance of the debt outstanding at the time the interest in Who Must Filethe property was acquired or on the date you first knew or had File Form 1099-C if you are:reason to know that the property was abandoned. Include only

1. A financial institution described in section 581 or 591(a)unpaid principal on the original debt. Do not include accrued(such as a domestic bank, trust company, building and loan orinterest or foreclosure costs.savings and loan association).

2. A credit union.Box 3. Reserved3. Any of the following, its successor, or subunit of one of the

following:Box 4. Fair Market Value (FMV) of Property a. Federal Deposit Insurance Corporation,For a foreclosure, execution, or similar sale, enter the FMV of the b. Resolution Trust Corporation,property. See Temporary Regulations section 1.6050J-1T, Q/A-32. c. National Credit Union Administration,Generally, the gross foreclosure bid price is considered to be the d. Any other federal executive agency, including governmentFMV. If an abandonment or voluntary conveyance to the lender in corporations,lieu of foreclosure occurred and you placed an “X” in the checkbox e. Any military department,in box 5, enter the appraised value of the property. Otherwise, f. U.S. Postal Service, ormake no entry in this box. g. Postal Rate Commission.

4. A corporation that is a subsidiary of a financial institution orBox 5. Was Borrower Personally Liable for credit union, but only if, because of your affiliation, you are subjectRepayment of the Debt to supervision and examination by a federal or state regulatory

agency.If the borrower was personally liable for repayment of the debt at5. A federal government agency including:the time the debt was created or, if modified, at the time of the lasta. A department,modification, enter an “X” in the checkbox.b. An agency,c. A court or court administrative office, orBox 6. Description of Propertyd. An instrumentality in the judicial or legislative branch of theEnter a general description of the property. For real property,

government.generally you must enter the address of the property, or, if the6. Any organization whose significant trade or business is theaddress does not sufficiently identify the property, enter the section,

lending of money, such as a finance company or credit cardlot, and block.company (whether or not affiliated with a financial institution). TheFor personal property, enter the applicable type, make, and lending of money is a significant trade or business if money is lentmodel. For example, describe a car as “Car—2008 Honda Accord.” on a regular and continuing basis. Regulations sectionUse a category such as “Office Equipment” to describe more than 1.6050P-2(b) lists three safe harbors under which reporting may notone piece of personal property, such as six desks and seven be required for the current year. See Safe harbor rules below.computers. Enter “CCC” for crops forfeited on Commodity Credit

Corporation loans.Safe harbor rules. The three safe harbor rules in which an entitywill not be considered to have a significant trade or business oflending money are:Specific Instructions for Form 1099-C 1. No prior year reporting required. An organization will nothave a significant trade or business of lending money for the

The Creditor’s phone number must be provided in the current year if the organization was not required to report in theCreditor’s information box. It should be a central number for prior year and if its gross income from lending money in the mostall canceled debts at which a person may be reached whoCAUTION

!recent test year (see item 3 below) is less than both 15% of the

will insure the debtor is connected with the correct department. organization’s gross income and $5 million.2. Prior year reporting requirement. An organization that had aDo not file Form 1099-C when fraudulent debt is canceled

prior year reporting requirement will not have a significant trade ordue to identity theft. Form 1099-C is to be used only forbusiness of lending money for the current year if, for each of the 3cancellations of debts for which the debtor actually incurredCAUTION

!most recent test years, its gross income from lending money is lessthe underlying debt.than both 10% of the organization’s gross income and $3 million.

File Form 1099-C, Cancellation of Debt, for each debtor for 3. No test year. Newly formed organizations are considered notwhom you canceled a debt owed to you of $600 or more if: to have a significant trade or business of lending money even if the

1. You are an entity described under Who Must File on this organization lends money on a regular and continuing basis.page and However, this safe harbor does not apply to an entity formed or

2. An identifiable event has occurred. It does not matter availed of for the principal purpose of holding loans acquired orwhether the actual cancellation is on or before the date of the originated by another entity. In this instance, the transferee entityidentifiable event. See When Is a Debt Canceled on page 3. (including real estate mortgage investment conduits (REMICs) and

pass-through securitized indebtedness arrangements) may beForm 1099-C must be filed regardless of whether the debtor required to report cancellation of indebtedness on Form 1099-C.is required to report the debt as income. See Regulations section 1.6050P-1(e)(5).

CAUTION!The debtor may be an individual, corporation, partnership, trust, Test year defined. A test year is a taxable year of the

estate, association, or company. organization that ends before July 1 of the previous calendar year.Do not combine multiple cancellations of a debt to determine For example, X, a calendar year taxpayer who has a significant

whether you meet the $600 reporting requirement unless the trade or business of lending money, is formed in year one. X willseparate cancellations are under a plan to evade the Form 1099-C not have a test year in year one or year two. However, for yearrequirements. three, X’s test year will be year one. In year three, year one is the

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only year that ended before July 1 of the previous calendar year (in 5. A cancellation or extinguishment due to a probate or similarthis example, year two). proceeding.

6. A discharge of indebtedness under an agreement betweenPenalties. There are penalties for failure to file correct informationthe creditor and the debtor to cancel the debt at less than fullreturns by the due date and for failure to furnish correct payeeconsideration.statements. See part O in the 2011 General Instructions for Certain

7. A discharge of indebtedness because of a decision or aInformation Returns for details.defined policy of the creditor to discontinue collection activity and

Exceptions. Until further guidance is issued, no penalty will cancel the debt. A creditor’s defined policy can be in writing or anapply for failure to file Form 1099-C, or provide statements to established business practice of the creditor. A creditor’s practice todebtors, for amounts: stop collection activity and abandon a debt when a particular• Discharged in nonlending transactions or nonpayment period expires is a defined policy.• Forgiven pursuant to the terms of a debt obligation. 8. The expiration of nonpayment testing period. This applies

only to entities described in numbers 1, 2, 3, or 4 under Who MustMultiple creditors. If a debt is owned (or treated as owned forFile on page 2. This event occurs when the creditor has notfederal income tax purposes) by more than one creditor, eachreceived a payment on the debt during the testing period. Thecreditor that is described under Who Must File on page 2 musttesting period is a 36-month period ending on December 31 plusissue a Form 1099-C if that creditor’s part of the canceled debt isany time when the creditor was precluded from collection activity by$600 or more. A creditor will be deemed to have met its filinga stay in bankruptcy or similar bar under state or local law. Therequirements if a lead bank, fund administrator, or other designeecreditor can rebut the occurrence of this identifiable event if:of the creditor complies on its behalf. The designee may file a

a. The creditor (or a third-party collection agency) has engagedsingle Form 1099-C reporting the aggregate canceled debt or mayin significant bona fide collection activity during the 12-month periodfile Form 1099-C for that creditor’s part of the canceled debt. Useending on December 31 orany reasonable method to determine the amount of each creditor’s

b. Facts and circumstances that exist on January 31 followingpart of the canceled debt.the end of the 36-month period indicate that the debt was not

Debt owned by a partnership is treated as owned by the canceled.partners and must follow the rules for multiple creditors. Significant bona fide collection activity does not include nominal

or ministerial collection action, such as an automated mailing. FactsPass-throughs and REMICs. Until further guidance is issued, noand circumstances indicating that a debt was not canceled includepenalty will apply for failure to file Form 1099-C, or providethe existence of a lien relating to the debt (up to the value of thestatements to debtors, for a canceled debt held in a pass-throughsecurity) or the sale or packaging for sale of the debt by thesecuritized debt arrangement or held by a REMIC. However, seecreditor.item 3 under Safe harbor rules on page 2.

A pass-through securitized debt arrangement is anyExceptionsarrangement in which one or more debts are pooled and held for 20

or more persons whose interests in the debt are undivided You are not required to report on Form 1099-C the following:co-ownership interests that are freely transferable. Co-ownership 1. Certain bankruptcies. You are not required to report a debtinterests that are actively traded personal property (as defined in discharged in bankruptcy unless you know from informationRegulations section 1.1092(d)-1) are presumed to meet these included in your books and records that the debt was incurred forrequirements. business or investment purposes. If you are required to report a

business or investment debt discharged in bankruptcy, report it forDebt Defined the later of:A debt is any amount owed to you, including stated principal, stated a. The year in which the amount of discharged debt first can beinterest, fees, penalties, administrative costs, and fines. The determined oramount of debt canceled may be all or only part of the total amount b. The year in which the debt is discharged in bankruptcy.owed. However, for a lending transaction, you are required to report A debt is incurred for business if it is incurred in connection withonly the stated principal. See Exceptions on this page. the conduct of any trade or business other than the trade or

business of performing services as an employee. A debt is incurredWhen To File for investment if it is incurred to purchase property held forGenerally, file Form 1099-C for the year in which an identifiable investment (as defined in section 163(d)(5)).event occurs. See Exceptions on this page. If you cancel a debt 2. Interest. You are not required to report interest. However, ifbefore an identifiable event occurs, you may choose to file Form you choose to report interest as part of the canceled debt in box 2,1099-C for the year of cancellation. No further reporting is required you must show the interest separately in box 3.even if a later identifiable event occurs with respect to an amount 3. Nonprincipal amounts. Nonprincipal amounts includepreviously reported. Also, you are not required to file an additional penalties, fines, fees, and administrative costs. For a lendingor corrected Form 1099-C if you receive payment on a prior year transaction, you are not required to report any amount other thandebt. stated principal. A lending transaction occurs when a lender loans

money to, or makes advances on behalf of, a borrower (includingWhen Is a Debt Canceled revolving credit and lines of credit). For a nonlending transaction,A debt is deemed canceled on the date an identifiable event occurs nonprincipal amounts are included in the debt. However, untilor, if earlier, the date of the actual discharge if you choose to file further guidance is issued, no penalties will be imposed for failureForm 1099-C for the year of cancellation. An identifiable event is: to report these amounts in nonlending transactions.

4. Foreign debtors. Until further guidance is issued, no penalty1. A discharge in bankruptcy under Title 11 of the U.S. Code.will apply if a financial institution does not file Form 1099-C for aFor information on certain discharges in bankruptcy not required todebt canceled by its foreign branch or foreign office for a foreignbe reported, see Exceptions on this page.debtor provided all the following apply:2. A cancellation or extinguishment making the debt

a. The financial institution is engaged in the active conduct of aunenforceable in a receivership, foreclosure, or similar federal orbanking or similar business outside the United States.state court proceeding.

b. The branch or office is a permanent place of business that is3. A cancellation or extinguishment when the statute ofregularly maintained, occupied, and used to carry on a banking orlimitations for collecting the debt expires, or when the statutorysimilar financial business.period for filing a claim or beginning a deficiency judgment

c. The business is conducted by at least one employee of theproceeding expires. Expiration of the statute of limitations is anbranch or office who is regularly in attendance at the place ofidentifiable event only when a debtor’s affirmative statute ofbusiness during normal working hours.limitations defense is upheld in a final judgment or decision of a

d. The indebtedness is extended outside the United States bycourt and the appeal period has expired.the branch or office in connection with that trade or business.4. A cancellation or extinguishment when the creditor elects

e. The financial institution does not know or have reason toforeclosure remedies that by law end or bar the creditor’s right toknow that the debtor is a U.S. person.collect the debt. This event applies to a mortgage lender or holder

who is barred by local law from pursuing debt collection after a 5. Related parties. Generally, a creditor is not required to file“power of sale” in the mortgage or deed of trust is exercised. Form 1099-C for the deemed cancellation of a debt that occurs

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when the creditor acquires the debt of a related debtor, becomes Statements to Debtorsrelated to the debtor, or transfers the debt to another creditor

If you are required to file Form 1099-C, you must provide arelated to the debtor. However, if the transfer to a related party bystatement to the debtor. Furnish a copy of Form 1099-C or anthe creditor was for the purpose of avoiding the Form 1099-Cacceptable substitute statement to each debtor. In the 2011requirements, Form 1099-C is required. See section 108(e)(4).General Instructions for Certain Information Returns, see:6. Release of a debtor. You are not required to file Form • Part M for more information about the requirement to furnish a1099-C if you release one of the debtors on a debt as long as thestatement to the debtor, andremaining debtors are liable for the full unpaid amount. • Part J for specific procedures to complete Form 1099-C for7. Guarantor or surety. You are not required to file Formdebtors in bankruptcy.1099-C for a guarantor or surety. A guarantor is not a debtor for

purposes of filing Form 1099-C even if demand for payment is Account Numbermade to the guarantor.

The account number is required if you have multiple accounts for a8. Seller financing. Organizations whose principal trade ordebtor for whom you are filing more than one Form 1099-C.business is the sale of non-financial goods or non-financialAdditionally, the IRS encourages you to designate an accountservices, and who extend credit to customers in connection with thenumber for all Forms 1099-C that you file. See part L in the 2011purchase of those non-financial goods and non-financial services,General Instructions for Certain Information Returns.are not considered to have a significant trade or business of lending

money, with respect to the credit extended in connection with the Box 1. Date Canceledpurchase of those goods or services, for reporting discharge of

Enter the date the debt was canceled. See When Is a Debtindebtedness on Form 1099-C. See Regulations sectionCanceled on page 3.1.6050P-2(c). But the reporting applies if a separate financing

subsidiary of the retailer extends the credit to the retailer’s Box 2. Amount of Debt Canceledcustomers.

Enter the amount of the canceled debt. See Debt Defined andExceptions on page 3. Do not include any amount the lenderMultiple Debtors receives in satisfaction of the debt by means of a settlement

For debts of $10,000 or more incurred after 1994 that involve agreement, foreclosure sale, etc.debtors who are jointly and severally liable for the debt, you must

Box 3. Interest if Included in Box 2report the entire amount of the canceled debt on each debtor’sForm 1099-C. Multiple debtors are jointly and severally liable for a Enter any interest you included in the canceled debt in box 2. Youdebt if there is no clear and convincing evidence to the contrary. If it are not required to report interest in box 2. But if you do, you alsocan be shown that joint and several liability does not exist, a Form must report it in box 3.1099-C is required for each debtor for whom you canceled a debt of

Box 4. Debt Description$600 or more.Enter a description of the origin of the debt, such as student loan,For debts incurred before 1995 and for debts of less thanmortgage, or credit card expenditure. Be as specific as possible. If$10,000 incurred after 1994, you must file Form 1099-C only for theyou are filing a combined Form 1099-C and 1099-A, include aprimary (or first-named) debtor.description of the property.If you know or have reason to know that the multiple debtors

were husband and wife who were living at the same address when Box 5. Was Debtor Personally Liable forthe debt was incurred, and you have no information that theseRepayment of the Debtcircumstances have changed, you may file only one Form 1099-C.If the debtor was personally liable for repayment of the debt at the

Recordkeeping time the debt was created or, if modified, at the time of the lastIf you are required to file Form 1099-C, you must retain a copy of modification, enter an “X” in the checkbox.that form or be able to reconstruct the data for at least 4 years from

Box 6. Check for Bankruptcythe due date of the return.Check the box if you are reporting a debt discharged in bankruptcy.

Requesting TINsBox 7. Fair Market Value (FMV) of PropertyYou must make a reasonable effort to obtain the correct name and

taxpayer identification number (TIN) of the person whose debt was If you are filing a combined Form 1099-C and 1099-A for acanceled. You may obtain the TIN when the debt is incurred. If you foreclosure, execution, or similar sale, enter the FMV of thedo not obtain the TIN before the debt is canceled, you must request property. Generally, the gross foreclosure bid price is considered tothe debtor’s TIN. Your request must clearly notify the debtor that be the FMV. If an abandonment or voluntary conveyance to thethe IRS requires the debtor to furnish its TIN and that failure to lender in lieu of foreclosure occurred, enter the appraised value offurnish such TIN subjects the debtor to a $50 penalty imposed by the property. the IRS. You may use Form W-9, Request for TaxpayerIdentification Number and Certification, to request the TIN.However, a debtor is not required to certify his or her TIN underpenalties of perjury.

-4- Instructions for Forms 1099-A and 1099-C (2011)

Reduction of Tax Attributes Due to Discharge ofIndebtedness (and Section 1082 Basis Adjustment)

Form 982 OMB No. 1545-0046 (Rev. March 2009)

Department of the TreasuryInternal Revenue Service

© Attach this form to your income tax return.

Identifying number Name shown on return

General Information (see instructions)

1 Amount excluded is due to (check applicable box(es)): Discharge of indebtedness in a title 11 case

a

Discharge of indebtedness to the extent insolvent (not in a title 11 case)

b Discharge of qualified farm indebtedness

c

2 2 Total amount of discharged indebtedness excluded from gross income Do you elect to treat all real property described in section 1221(a)(1), relating to property held for sale to

customers in the ordinary course of a trade or business, as if it were depreciable property?

No Yes Reduction of Tax Attributes. You must attach a description of any transactions resulting in the reduction in basis under section 1017. See Regulations section 1.1017-1 for basis reduction ordering rules, and, if applicable, required partnership consent statements. (For additional information, see the instructions for Part II.) Enter amount excluded from gross income:

That you elect under section 108(b)(5) to apply first to reduce the basis (under section 1017) ofdepreciable property

5 5

Applied to reduce any net operating loss that occurred in the tax year of the discharge or carriedover to the tax year of the discharge

6 6

Applied to reduce any general business credit carryover to or from the tax year of the discharge

7 7 8

Applied to reduce any net capital loss for the tax year of the discharge including any capital losscarryovers to the tax year of the discharge

8 9

9 10a

11a

b 11b

c Other property used or held for use in a trade or business, or for the production of income

11c

Applied to reduce any foreign tax credit carryover to or from the tax year of the discharge

11

Consent of Corporation to Adjustment of Basis of Its Property Under Section 1082(a)(2)

Under section 1081(b), the corporation named above has excluded $ from its gross incomefor the tax year beginning , and ending .

Under that section, the corporation consents to have the basis of its property adjusted in accordance with the regulations prescribed under section 1082(a)(2) in effect at the time of filing its income tax return for that year. The corporation is organized under the laws of .

(State of incorporation)

Note. You must attach a description of the transactions resulting in the nonrecognition of gain under section 1081.

Form 982 (Rev. 3-2009)

For a discharge of qualified farm indebtedness, applied to reduce the basis of:

Applied to reduce the basis of nondepreciable and depreciable property if not reduced on line5. DO NOT use in the case of discharge of qualified farm indebtedness

Land used or held for use in a trade or business of farming

Part I

Part II

Part III

3

Cat. No. 17066E

AttachmentSequence No. 94

Discharge of qualified real property business indebtedness

For a discharge of qualified real property business indebtedness, applied to reduce the basis ofdepreciable real property

Depreciable property used or held for use in a trade or business, or for the production of income, ifnot reduced on line 5

4

a

4

d

Applied to reduce any minimum tax credit as of the beginning of the tax year immediately afterthe tax year of the discharge

Applied to reduce any passive activity loss and credit carryovers from the tax year of the discharge

10a

13

12

13

For Paperwork Reduction Act Notice, see page 5 of this form.

12

Discharge of qualified principal residence indebtedness

e

b Applied to reduce the basis of your principal residence. Enter amount here ONLY if line 1e ischecked

10b

Discharge of certain indebtedness of a qualified individual because of Midwestern disasters

f

General Instructions Section references are to the Internal Revenue Code unlessotherwise noted.

Generally, the amount by which you benefit from thedischarge of indebtedness is included in your gross income.However, under certain circumstances described in section108, you can exclude the amount of discharged indebtednessfrom your gross income.

Page 2 Form 982 (Rev. 3-2009)

Purpose of Form

What’s New

● The Heartland Disaster Tax Relief Act of 2008 allowsqualified individuals to exclude from gross income dischargesof certain indebtedness because of Midwestern disasters. Seethe instructions for line 1f for more information.

● The Emergency Economic Stabilization Act of 2008extended the exclusion from gross income for the dischargeof qualified principal residence indebtedness by an additional3 years. This exclusion now applies to debt discharged after2006 and before 2013.

You must file Form 982 to report the exclusion and thereduction of certain tax attributes either dollar for dollar or331⁄ 3 cents per dollar (as explained below).

How To Complete the Form IF the discharged debt you are excluding is . . .

THEN follow these steps . . .

Qualified principal residence indebtedness

1. Be sure to read the definition of qualified principal residence indebtedness in the instructions for line 1e on page4. Part or all of your debt may not qualify for the exclusion on line 1e but may qualify for one of the other exclusions. 2. Check the box on line 1e.

3. Include on line 2 the amount of discharged qualified principal residence indebtedness that is excluded fromgross income. Any amount in excess of the excluded amount may result in taxable income. See Pub. 4681, for moreinformation. If you disposed of your residence, you may also be required to recognize a gain on its disposition. Fordetails, see Pub. 523, Selling Your Home. 4. If you continue to own your residence after the discharge, enter on line 10b the smaller of (a) the amount ofqualified principal residence indebtedness included on line 2 or (b) the basis (generally, your cost plusimprovements) of your principal residence. If the discharge occurs in a title 11 case, you cannot check box 1e. You must check box 1a and

complete the form as discussed below under A nonbusiness debt. If you are insolvent (and not in a title11 case), you can elect to follow the insolvency rules by checking box 1b instead of box 1e andcompleting the form as discussed below under A nonbusiness debt.

CAUTION

A nonbusiness debt (other than qualified principalresidence indebtedness, such as a car loan or creditcard debt)

Follow these instructions if you do not have any of the tax attributes listed in Part II (other than a basis in nondepreciable property). Otherwise, follow the instructions for Any other debt below.

1. Check the box on line 1a if the discharge was made in a title 11 case (see the definition in the instructions onpage 3), the box on line 1b if the discharge occurred when you were insolvent (see the definition in the instructionsfor line 1b on page 3), or the box on line 1f if you are a qualified individual whose indebtedness was discharged byan applicable entity because of a Midwestern disaster (see the definitions in the instructions for line 1f on page 4).

2. Include on line 2 the amount of discharged nonbusiness debt that is excluded from gross income. If you wereinsolvent, do not include more than the excess of your liabilities over the fair market value of your assets. 3. Include on line 10a the smallest of (a) the basis of your nondepreciable property, (b) the amount of thenonbusiness debt included on line 2, or (c) the excess of the aggregate bases of the property and the amount ofmoney you held immediately after the discharge over your aggregate liabilities immediately after the discharge.

Any other debt

Use Part I of Form 982 to indicate why any amount received from the discharge of indebtedness should beexcluded from gross income and the amount excluded. Use Part II to report your reduction of tax attributes. The reduction must be made in the following order unless youcheck the box on line 1d for qualified real property business indebtedness or make the election on line 5 to reducebasis of depreciable property first. 1. Any net operating loss (NOL) for the tax year of the discharge (and any NOL carryover to that year) (dollar fordollar); 2. Any general business credit carryover to or from the tax year of the discharge (331⁄ 3 cents per dollar);

3. Any minimum tax credit as of the beginning of the tax year immediately after the tax year of the discharge (331⁄ 3 cents per dollar); 4. Any net capital loss for the tax year of the discharge (and any capital loss carryover to that tax year) (dollar fordollar); 5. The basis of property (dollar for dollar);

6. Any passive activity loss (dollar for dollar) and credit (331⁄ 3 cents per dollar) carryovers from the tax year of thedischarge; and 7. Any foreign tax credit carryover to or from the tax year of the discharge (331⁄ 3 cents per dollar).

Use Part III to exclude from gross income under section 1081(b) any amounts of income attributable to the transferof property described in that section.

● The American Recovery and Reinvestment Act of 2009allows certain businesses to elect to defer and include ratablyover five tax years any income from the discharge of business

debt arising from the reacquisition of certain types of businessdebt repurchased in 2009 and 2010. If you make this election,you cannot exclude for the taxable year of the election or anysubsequent taxable year the income from the discharge ofsuch indebtedness based on a title 11 bankruptcy case,insolvency, qualified farm indebtedness, or qualified realproperty business indebtedness. For more details, includinghow to make the election, see section 108(i).

Page 3 Form 982 (Rev. 3-2009)

Qualified acquisition indebtedness is (a) debt incurred orassumed to acquire, construct, reconstruct, or substantiallyimprove real property that is secured by such debt; and (b)debt resulting from the refinancing of qualified acquisitionindebtedness, to the extent the amount of such debt doesnot exceed the amount of debt being refinanced. You cannot exclude more than the excess of theoutstanding principal amount of the debt (immediately beforethe discharge) over the net FMV (as of that time) of theproperty securing the debt, reduced by the outstandingprincipal amount of other qualified real property businessindebtedness secured by that property (as of that time). Theamount excluded is further limited to the aggregate adjustedbasis (as of the first day of the next tax year, or if earlier, thedate of disposition) of depreciable real property (determined

Line 1d

Qualified real property business indebtedness isindebtedness (other than qualified farm indebtedness) that:(a) is incurred or assumed in connection with real propertyused in a trade or business; (b) is secured by that realproperty; and (c) with respect to which you have made anelection under this provision. This provision does not apply toa corporation (other than an S corporation). Indebtedness incurred or assumed after 1992 is notqualified real property business indebtedness unless it iseither: (a) debt incurred to refinance qualified real propertybusiness indebtedness incurred or assumed before 1993 (butonly to the extent the amount of such debt does not exceedthe amount of debt being refinanced) or (b) qualifiedacquisition indebtedness.

Qualified farm indebtedness is the amount of indebtednessincurred directly in connection with the trade or business offarming. In addition, 50% or more of your aggregate grossreceipts for the 3 tax years preceding the tax year in which thedischarge of such indebtedness occurs must be from thetrade or business of farming. For more information, seesections 108(g) and 1017(b)(4). The discharge must have been made by a qualified person.Generally, a qualified person is an individual, organization,etc., who is actively and regularly engaged in the business oflending money. This person cannot be related to you, be theperson from whom you acquired the property, or be a personwho receives a fee with respect to your investment in theproperty. Also, a qualified person includes any federal, state,or local government or agency or instrumentality thereof. If you checked line 1c and did not make the election on line5, the debt discharge amount will be applied to reduce the taxattributes in the order listed on lines 6 through 9. Anyremaining amount will be applied to reduce the tax attributesin the order listed on lines 11a through 13. You cannot exclude more than the total of your: (a) taxattributes (determined under section 108(g)(3)(B)); and (b)basis of property used or held for use in a trade or business orfor the production of income. Any excess is included inincome.

Title 11 Case

File Form 982 with your federal income tax return for a year adischarge of indebtedness is excluded from your incomeunder section 108(a). The election to reduce the basis of depreciable propertyunder section 108(b)(5) and the election made on line 1d ofPart I regarding the discharge of qualified real propertybusiness indebtedness must be made on a timely-filed return(including extensions) and can be revoked only with theconsent of the IRS.

Specific Instructions Part I

Discharge of Indebtedness

Definitions

When To File

If you timely filed your tax return without making either ofthese elections, you can still make either election by filing anamended return within 6 months of the due date of the return(excluding extensions). Write “Filed pursuant to section301.9100-2” on the amended return and file it at the sameplace you filed the original return.

Line 1b

Check the box on line 1b if the discharge of indebtednessoccurred while you were insolvent. You were insolvent to theextent that your liabilities exceeded the fair market value(FMV) of your assets immediately before the discharge. Fordetails and a worksheet to help calculate insolvency, seePub. 4681. Example. You were released from your obligation to payyour credit card debt in the amount of $5,000. The FMV ofyour total assets immediately before the discharge was$7,000 and your liabilities were $10,000. You were insolventto the extent of $3,000 ($10,000 of total liabilities minus$7,000 of total assets). Check the box on line 1b and include$3,000 on line 2.

Line 1c

Certain individuals may need to complete only afew lines on Form 982. For example, if you arecompleting this form because of a discharge ofindebtedness on a personal loan (such as a car loan

or credit card debt) or a loan for the purchase of your principalresidence, follow the chart on page 2 to see which lines youneed to complete. Also, see Pub. 4681, Canceled Debts,Foreclosures, Repossessions, and Abandonments, foradditional information including many examples andcompleted forms.

TIP

If you made an election under section 108(i) todefer income from the discharge of business debtarising from the reacquisition of a debt instrument,you cannot exclude on lines 1a through 1d the

income from the discharge of such indebtedness for thetaxable year of the election or any subsequent taxable year.

CAUTION

A title 11 case is a case under title 11 of the United StatesCode (relating to bankruptcy), but only if you are under thejurisdiction of the court in the case and the discharge ofindebtedness is granted by the court or is under a planapproved by the court.

The term discharge of indebtedness conveys forgiveness of,or release from, an obligation to repay.

The insolvency exclusion does not apply to any dischargethat occurs in a title 11 case. It also does not apply to adischarge of qualified principal residence indebtedness (seethe instructions for line 1e on page 4) unless you elect tohave the insolvency exclusion apply instead of the exclusionfor qualified principal residence indebtedness.

Check this box if the income you exclude is from thedischarge of qualified farm indebtedness. The exclusionrelating to qualified farm indebtedness does not apply to adischarge that occurs in a title 11 case or to the extent youwere insolvent.

If you check this box, the discharge of qualified real propertybusiness indebtedness is applied to reduce the basis ofdepreciable real property on line 4. The exclusion relating toqualified real property business indebtedness does not applyto a discharge that occurs in a title 11 case or to the extentyou were insolvent.

Page 4 Form 982 (Rev. 3-2009)

See section 382(l)(5) for a special rule regarding areduction of a corporation’s tax attributes after certainownership changes. Line 3

Check this box, if the income you exclude is nonbusinessdebt that is discharged by an applicable entity and you are aqualified individual. This exclusion only applies to dischargesmade on or after the applicable disaster date and before2010, and does not apply to any indebtedness secured byreal property located outside of the Midwestern disaster area.Any amount excluded from gross income must be used toreduce certain tax attributes as explained earlier under HowTo Complete the Form.

Line 1e

Principal residence. Your principal residence is the homewhere you ordinarily live most of the time. You can have onlyone principal residence at any one time. Qualified principal residence indebtedness. Thisindebtedness is a mortgage you took out to buy, build, orsubstantially improve your principal residence. It also must besecured by your principal residence. If the amount of youroriginal mortgage is more than the cost of your principalresidence plus the cost of any substantial improvements, onlythe debt that is not more than the cost of your principalresidence plus improvements is qualified principal residenceindebtedness. Any debt secured by your principal residencethat you use to refinance qualified principal residenceindebtedness is treated as qualified principal residenceindebtedness, but only up to the amount of the old mortgageprincipal just before the refinancing. Any additional debt youincurred to substantially improve your principal residence isalso treated as qualified principal residence indebtedness. Amount eligible for the exclusion. The exclusion applies onlyto debt discharged after 2006 and before 2013. The maximumamount you can treat as qualified principal residenceindebtedness is $2 million ($1 million if married filingseparately). You cannot exclude from gross income dischargeof qualified principal residence indebtedness if the dischargewas for services performed for the lender or on account of anyother factor not directly related to a decline in the value ofyour residence or to your financial condition. Ordering rule. If only a part of a loan is qualified principalresidence indebtedness, the exclusion applies only to theextent the amount discharged exceeds the amount of the loan(immediately before the discharge) that is not qualifiedprincipal residence indebtedness. For example, assume yourprincipal residence is secured by a debt of $1 million, of which$800,000 is qualified principal residence indebtedness. If yourresidence is sold for $700,000 and $300,000 of debt isdischarged, only $100,000 of the debt discharged can beexcluded (the $300,000 that was discharged minus the$200,000 of nonqualified debt). The remaining $200,000 ofnonqualified debt may qualify in whole or in part for one of theother exclusions, such as the insolvency exclusion.

Qualified individual. To be a qualified individual, you must bean individual whose principal residence on the applicabledisaster date, was located in:

● The Midwestern disaster area as listed in Table 1 of Pub.4492-B, Information for Affected Taxpayers in theMidwestern Disaster Areas, or ● The area listed in Table 2 of Pub. 4492-B and you sufferedan economic loss because of a Midwestern disaster. Applicable entity. An applicable entity includes:

● A financial institution described in section 581 or 591(a)(such as a domestic bank, trust company, building and loanor savings and loan association). ● A credit union.

● A federal government agency including a department, anagency, a court or court administrative office, or aninstrumentality in the executive, judicial, or legislative branchof the government, including government corporations. ● Any of the following, its successor, or subunit of one of thefollowing: a. Federal Deposit Insurance Corporation,

b. Resolution Trust Corporation, c. National Credit Union Administration, d. Any military department, e. U.S. Postal Service, or f. Postal Rate Commission. ● Certain subsidiaries of a financial institution or credit union.

● Any organization whose significant trade or business is thelending of money, such as a finance company or credit cardcompany (whether or not affiliated with a financial institution).

Applicable disaster date. This is the date on which thesevere storms, tornadoes, or flooding occurred in theMidwestern disaster areas.

Line 2

An entity that is required to file Form 1099-C,Cancellation of Debt, is an applicable entity.

TIP

Midwestern disaster areas. A Midwestern disaster area is anarea for which a major disaster was declared by the Presidentduring the period beginning on May 20, 2008, and ending onJuly 31, 2008, in the state of Arkansas, Illinois, Indiana, Iowa,Kansas, Michigan, Minnesota, Missouri, Nebraska, orWisconsin as a result of severe storms, tornadoes or floodingthat occurred on the applicable disaster date. See Tables 1and 2 in Pub. 4492-B for a list of the counties included in theMidwestern disaster areas.

Check this box if the income you exclude is from dischargeof qualified principal residence indebtedness. Also, be sureyou complete line 2 (and line 10b if you continue to own theresidence after discharge). However, if the discharge occursin a title 11 case, you must check the box on line 1a and notthis box. If you are insolvent (and not in a title 11 case), youcan elect to follow the insolvency rules by checking box 1binstead of checking this box. For more information, see Pub.4681.

Line 1f

Enter the total amount excluded from your gross income dueto discharge of indebtedness under section 108. If youchecked any box on lines 1b through 1e, do not enter morethan the limit explained in the instructions for those lines. Ifyou checked line 1a, 1b, 1c, or 1f, this amount will notnecessarily equal the total reductions on lines 5 through 13(excluding line 10b) because the debt discharge amount mayexceed the total tax attributes. If you checked line 1e, thisamount will not necessarily equal the total basis reduction online 10b (which is required only if you continue to own theresidence after the discharge).

You can elect under section 1017(b)(3)(E) to treat all realproperty held primarily for sale to customers in the ordinarycourse of a trade or business as if it were depreciableproperty. This election does not apply to the discharge ofqualified real property business indebtedness. To make theelection, check the “Yes” box.

after any reductions under sections 108(b) and (g)) you heldimmediately before the discharge (other than propertyacquired in contemplation of the discharge). Any excess isincluded in income.

Page 5 Form 982 (Rev. 3-2009)

Part III Adjustment to Basis

If the corporation desires to have the basis of its propertyadjusted in a manner different from the general rule, it mustattach a request for variation from the general rule. Therequest must show the precise method used and theallocation of amounts. Consent to the request for variation from the general rulewill be effective only if it is incorporated in a closingagreement entered into by the corporation and theCommissioner of Internal Revenue under the rules of section7121. If no agreement is entered into, then the general rule willapply in determining the basis of the corporation’s property.

If you have comments concerning the accuracy of thesetime estimates or suggestions for making this form simpler,we would be happy to hear from you. See the instructions forthe tax return with which this form is filed.

The time needed to complete and file this form will varydepending on individual circumstances. The estimatedburden for individual taxpayers filing this form is approvedunder OMB control number 1545-0074 and is included in theestimates shown in the instructions for their individualincome tax return. The estimated burden for all othertaxpayers who file this form is shown as follows:Recordkeeping, 5 hr., 58 min.; Learning about the law orthe form, 2 hr., 17 min.; Preparing and sending the formto the IRS, 2 hr., 28 min.

Paperwork Reduction Act Notice. We ask for theinformation on this form to carry out the Internal Revenuelaws of the United States. You are required to give us theinformation. We need it to ensure that you are complyingwith these laws and to allow us to figure and collect the rightamount of tax. You are not required to provide the information requestedon a form that is subject to the Paperwork Reduction Actunless the form displays a valid OMB control number. Booksor records relating to a form or its instructions must beretained as long as their contents may become material inthe administration of any Internal Revenue law. Generally, taxreturns and return information are confidential, as required bysection 6103.

● The part of line 2 that is attributable to the exclusion ofqualified principal residence indebtedness, or ● The basis of your principal residence.

Basis Reduction

Part II

Line 10a

If you have a general business credit carryover to or from thetax year of the discharge, you must reduce that carryover by331⁄ 3 cents for each dollar excluded from gross income. SeeForm 3800, General Business Credit, for more details on thegeneral business credit, including rules for figuring anycarryforward or carryback.

Line 10b

Line 7

In the case of a title 11 case or insolvency (except when anelection under section 108(b)(5) is made), the reduction inbasis is limited to the aggregate of the basis of your propertyimmediately after the discharge over the aggregate of yourliabilities immediately after the discharge.

If box 1e is checked and you continue to own the residenceafter discharge, enter the smaller of:

Unless it specifically states otherwise, the corporation, byfiling this form, agrees to apply the general rule for adjustingthe basis of property (as described in Regulations section1.1082-3(b)).

If you check any of the boxes on lines 1a through 1c and 1f,you can elect, by completing line 5, to apply all or a part of thedebt discharge amount to first reduce the basis of depreciableproperty (including property you elected on line 3 to treat asdepreciable property). Any balance of the debt dischargeamount will then be applied to reduce the tax attributes in theorder listed on lines 6 through 13 (excluding line 10b). Youmust attach a statement describing the transactions thatresulted in the reduction in basis under section 1017 andidentifying the property for which you reduced the basis. If youdo not make the election on line 5, complete lines 6 through13 (excluding line 10b) to reduce your attributes. See section1017(b)(2) and (c) for limitations of reductions in basis on line 10a.

  

AGREEMENT TO SELECT LAW FIRM (This Agreement Is To Be Attached To the Property Purchase Contract) 

 This Agreement to Select Law Firm (“Agreement”) is made as of             20          , by    

                                                               (collectively  “Seller”)  and  

                (collectively  “Buyer”)  with  respect  to  the 

real property commonly described as                                       

(the “Property”). Seller and Buyer (the “Parties”) have entered into an agreement in which Seller agrees to sell the 

Property to Buyer, subject to short sale approvals (the “Purchase Agreement). 

 In order to effectively implement the Purchase Agreement, the Parties agree as follows: 

 1.  The  Law Office  of Douglas G.  Edmunds,  PLC  (the  “Law  Firm”)  are  the  attorneys  for  the  Seller  in  this transaction. 

2.  The  Parties  select  the  Law  Firm  and  its  agents,  employees  and  assigns,  to  communicate with  the  lien holders encumbering the Property to seek approval of the necessary lien releases and payoff discounts necessary for the short sale. 

3.  The  Parties  understand  that  the  Law  Firm will  attempt  to  obtain  approval  of  lien  releases  and  payoff discounts needed from all lien holders as needed to accomplish a short sale and that the Law Firm has not made any promises, guarantees or representations about the ability to successfully complete this task. Although the Law Firm  is acting on behalf of Seller, Buyer shall be responsible  for assuring compensation of the Law Firm  if Buyer completes the purchase. 

4.  The Parties agree that this sale is to be conducted by including a Short Sale Negotiating Fee (the “Fee”) of $3,499 to be paid to the Law Firm by the Buyer if not paid by the Short Sale Lender.   Should the Buyer be responsible for the Fee, the Fee shall be paid as an additional settlement charge to be included on the Buyer’s side of the HUD‐1 Settlement Statement and paid at the time of closing. The FEE is payable by the Buyer ONLY if the transaction closes. In an attempt to offset the Fee, the Law Firm will present to the Lien Holder(s) for approval a contract offer between the Buyer and Seller that includes 3% in Seller’s contribution as a credit to the Buyer.    

If the Law Firm is unable to negotiate a Seller contribution credited to the Buyer, or if Buyer requires any Seller contributions to be applied to their closing costs, the Buyer will be responsible for the Fee. 

 If the Law Firm is unsuccessful in negotiating a short sale or discounted mortgage payoff to facilitate a 

transaction for the contract sales price or on terms otherwise acceptable to Buyer, the Buyer has no contractual obligation to the Law Firm..  5.   The Parties understand fully and completely that, if the Law Firm is not able to obtain discounted payoffs with the lien holders, then one or more of the lien holders may proceed with foreclosure. Neither the Law Firm nor Buyer can assure Seller that foreclosure will ultimately be avoided.  6.   The Parties understand that it is impossible to assure obtaining all necessary approvals to timely complete the short sale; therefore they agree to hold each other, the Law Firm, and all of their respective agents, attorneys, 

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employees and assigns harmless  from and against any and all claims, demands or Lawsuits by the Parties or the Parties’ assigns based on the failure of the approvals necessary to the short sale from being obtained, except in the case of wanton misconduct, neglect or failure to cooperate. 7.   The Parties understand that the Law Firm is not acting as the attorneys for anyone other than the Seller in this transaction.    8.   The Parties agree to hold the Law Firm harmless and to fully  indemnify the Law Firm (including but not limited to attorney’s fees, whether or not litigation ensues, costs and all other litigation expenses).  I HAVE COMPLETELY READ THIS AGREEMENT BEFORE SIGNING IT AND I AGREE TO ITS TERMS AND CONDITIONS.                                 Seller #1 Signature             Date   Buyer #1 Signature             Date                                 Seller #2 Signature             Date   Buyer #2 Signature             Date                                             Seller’s Real Estate Agent’s Signature         Date   Buyer’s Real Estate Agent’s Signature         Date (Affirming understanding of terms only)      (Affirming understanding of terms only) 

Previous editions are obsolete form HUD-928.1 (2/2003)

U. S. Department of Housing and Urban Development

EQUAL HOUSING OPPORTUNITY

We Do Business in Accordance With the Federal Fair Housing Law

(The Fair Housing Amendments Act of 1988)

It is illegal to Discriminate Against Any Person Because of Race, Color, Religion, Sex,Handicap, Familial Status, or National Origin

In the sale or rental of housing or residential lots

In advertising the sale or rental of housing

In the financing of housing

In the provision of real estate brokerage services

In the appraisal of housing

Blockbusting is also illegal

Anyone who feels he or she has beendiscriminated against may file a complaint ofhousing discrimination: 1-800-669-9777 (Toll Free) 1-800-927-9275 (TTY)

U.S. Department of Housing andUrban DevelopmentAssistant Secretary for Fair Housing andEqual OpportunityWashington, D.C. 20410

Goodyear, Maricopa County, Arizona

PHOENIX-GOODYEAR AIRPORT(NORTH) SUPERFUND SITE

U.S. Environmental Protection Agency $ Region 9 $ San Francisco, CA

The Environmental Protection Agency (EPA) released adocument entitled, “Engineering Evaluation/Cost

Analysis (EE/CA) for Perchlorate Treatment, Phoenix-Goodyear Airport (PGA) North Superfund Site,Goodyear, Arizona.” The EPA developed the EE/CA re-port as the first step in a non-time critical removal actionto address perchlorate contamination in extracted ground-water at the PGA North Superfund Site (Site).

The EE/CA report provides information about the natureand extent of contamination and the related risks. Theprimary contaminants of concern associated with the Site

are volatile organic compounds (VOCs), particularlytrichloroethylene (TCE) and perchlorate. UnidynamicsPhoenix, Inc. (UPI) used these chemicals as degreasingagents and propellants during their former operations inthe testing and manufacturing defense system components.The EE/CA report addresses only perchlorate becauseremediation of TCE is already being addressed by the 1989Record of Decision (ROD).

The EE/CA report also evaluates three main criteria foraddressing perchlorate-contaminated groundwater ex-tracted from the Site: 1) Implementation; 2) Effectiveness;and 3) Cost. Additionally, the document identifies the po-tential regulatory requirements for these actions. The re-port considers four removal action alternatives (shown be-low) for cleanup at the Site and identifies the preferred al-ternative. Following a public review and comment periodon the EE/CA report, EPA will document the selected re-moval action alternative in a Removal ActionMemorandum.

October 2007

Engineering Evaluation/Cost Analysis forPerchlorate Treatment

EA-06

EA-05

RID CANAL

Estimated extent of Subunit A groundwater contamination, dashed where inferred (approx. 70-130 feet underground). *Based on Fourth Quarter 2006 groundwater monitoring data.

EPA does not consider surface areas above the contaminated groundwater plume that are outside of the source area and not used for remediation activities as part of the Superfund site.

Approximate location of proposed extraction well

LEGEND

PGA North Superfund SIte

PUBLIC COMMENT PERIODA public comment period was held from August18, 2007 through September 17, 2007. Duringthis time, copies of the EE/CA for PerchlorateTreatment, PGA North Superfund Site,Goodyear, Arizona document was available forreview at the Information Repository located atthe Avondale Public Library, 328 West WesternAvenue, Avondale, AZ 85323; (623) 333-2665.The Draft EE/CA was also available at US EPA’sSite Overview for the PGA site:

www.epa.gov/region9/phoenix-goodyearairport

Page $ 2 Phoenix-Goodyear Airport (North) Superfund Site

Site Description andBackgroundThe former Unidynamics/Phoenix, Inc. (UPI) facility islocated on approximately 58 acres in Goodyear, MaricopaCounty, Arizona, approximately 17 miles west of down-town Phoenix. The physical boundaries of the UPI facilityare Van Buren Street to the north, Litchfield Road to theeast, a vacant field to the south and Union Pacific Railroadtracks to the west. The Site lies in the West Basin of theSalt River Valley.

The Site consists of an area of contaminated groundwaterthat encompasses approximately two square miles andoriginates at the former UPI facility. Active operationstook place at the facility from 1963 to 1994, includingmanufacturing and testing mechanical and electrical com-ponents used in defense and aerospace applications. Theprimary operations at the plant included manufacturingrocket propellant, processing and blending powder, assem-bling ordnance, machining, testing explosives and ballisticsand related functions. Perchlorate is the primary chemicalingredient of solid rocket propellant. Historical recordsindicate that potassium perchlorate and ammonium per-chlorate were associated with wastes disposed at the UPIfacility.

In 1981, the Arizona Department of Health Services(ADHS) discovered that groundwater in the Site area wascontaminated with TCE and other VOCs from the manu-facturing operations at UPI. As a result, EPA added theoverall Phoenix-Goodyear Airport Site to the National Pri-orities List (NPL) in September 1983 as the LitchfieldAirport Area Superfund Site. After the airport propertywas transferred to the City of Phoenix, the Site was re-named the Phoenix-Goodyear Airport Area SuperfundSite. Later, the Site was divided into two parts represent-ing two different source areas: Phoenix-Goodyear AirportNorth and Phoenix-Goodyear Airport South.

ResultsThe EE/CA states that the maximum historical perchloratelevel in groundwater is 130 micrograms per liter (ug/L),and the maximum level based on 2006 data is 45 ug/L. Afederal Safe Drinking Water Act standard has not been setfor perchlorate. Therefore, EPA is selecting the ADHShealth-based guidance level of 14 ug/L as the Site-specificcleanup level for perchlorate. Groundwater with perchlor-ate levels at or above 14 ug/L will require treatment.

Following a detailed review of technologies for perchlorateremoval, the EE/CA considers the following four removalaction alternatives for the PGA North site:

$ Alternative 1 – No Action. This consists of no ac-tion being taken, not even monitoring. EPA is re-quired to evaluate this option for comparison pur-poses.

$ Alternative 2 – Ion Exchange (EPA’s Preferred Al-ternative). A resin material (similar to smallbeads) is packed into large vessels and used to cap-ture perchlorate from the groundwater. This alter-native is preferred because the technology is effec-tive; it is being implemented at the site in a full-scale pilot test; and it has a relatively low cost.

$ Alternative 3 – Tailored Liquid Phase GranularActivated Carbon. This alternative uses a spe-cially-coated carbon packed into a large vessel toabsorb the perchlorate from the groundwater.

$ Alternative 4 – Ex-Situ Biotreatment. This alter-native uses a bioreactor in which the perchlorate isreduced to chloride and oxygen under anaerobicconditions.

Based on a favorable balance of the evaluation criteria pre-sented in the EE/CA report, EPA prefers the implementa-tion of Alternative 2. Compared to the other three alter-natives considered, Alternative 2 provides the followingadvantages:

$ Proven technology to reduce perchlorate contami-nation to nondetectable concentrations

$ Part of existing Main Treatment Systems (MTS)for ongoing groundwater cleanup

$ Commercially available and broadly accepted tech-nology

$ Lowest overall cost to address perchlorate contami-nation at MTS

The other alternatives were not preferred for various rea-sons. Alternative 1 was not selected because it would notmeet the selected Site-specific cleanup level for perchlorate.Alternative 3 is still considered a developing technologyand has not been widely utilized. Alternative 4 requiresconsiderably more land area to implement and steps tomaintain optimal conditions for the system performance.

October 2007 Page $ 3

GLOSSARYAquifer is an underground geologic formation containing groundwater.

Groundwater is the supply of water found below the ground surface, usually in an aquifer.

Ion Exchange is a treatment technology used to remove perchlorate and other inorganic contaminantsfrom groundwater. The technology uses small beads packed into a large vessel through whichwater passes.

Ex Situ refers to treatment of groundwater that takes place above ground rather than in place or “insitu.”

National Priorities List (NPL) is EPA’s list of the most serious uncontrolled or abandoned hazardouswaste sites identified for possible long-term remedial action under Superfund. The list is basedprimarily on the score a site receives from the Hazard Ranking System. A site must be on the NPLto receive money from Superfund for remedial action.

Non-time Critical Removal Action is a short-term action with a planning period of more than sixmonths prior to the start of on-site activities. This differs from Time Critical Removal Actions, whichis typically used to respond to urgent situations.

Perchlorate is a component of ammonium perchlorate and other inorganic salts used in rockets andother applications.

Record of Decision (ROD) is a public document that explains which cleanup alternative(s) will be usedat National Priorities List sites where, under CERCLA, Superfund pays for the cleanup.

Removal Action is the short-term immediate actions taken to address releases of hazardoussubstances that require expedited response.

Superfund is the common name for the Comprehensive Environmental Response, Compensation, andLiability Act (CERCLA), and is used to investigate and clean up abandoned or uncontrolledhazardous waste.

Tailored Liquid Phase Granular Activated Carbon is a newer treatment technology used to removeperchlorate. Carbon, coated with a material that provides for perchlorate treatment, is packed into alarge vessel through which water passes.

Trichloroethylene (TCE) is a stable, low boiling-point colorless liquid, toxic if inhaled. It is used as asolvent or metal degreasing agent, and in other industrial applications.

Volatile Organic Compounds (VOCs) are carbon-containing chemical compounds, some of whichevaporate readily at room temperature.

Site RepositoryAvondale Public Library328 West Western Ave.Avondale, AZ 85323(623) 333-2665Hours: Monday-Thursday 10 a.m. - 7 p.m.

Friday-Saturday 10 a.m. - 5 p.m.

EPA Superfund Records Center95 Hawthorne St., 4th FloorSan Francisco, CA 94105(415) 536-2000Hours: Monday-Friday 8 a.m. - 5 p.m.

FIRST-CLASS MAILPOSTAGE & FEES

PAIDU.S. EPA

Permit No. G-35

Official BusinessPenalty for Private Use, $300

Address Service Requested

United States Environmental Protection AgencyRegion 975 Hawthorne Street (SFD-3)San Francisco, CA 94105Attn: José García (PGA-N 10/07)

PHOENIX-GOODYEAR AIRPORT (NORTH) SUPERFUND SITEEngineering Evaluation/Cost Analysis for Perchlorate Treatment

Mary AycockRemedial Project ManagerUSEPA Region 975 Hawthorne Street, SFD-8-2San Francisco, CA 94105(415) 972-3289aycock.mary@epa.gov

José GarcíaCommunity Involvement CoordinatorUSEPA Region 975 Hawthorne Street, SFD-3San Francisco, CA 94105(415) 972-3331 or (800) 231-3075garcia.jose@epa.gov

Site ContactsCathy O’ConnellRemedial Project ManagerADEQ1110 W Washington StreetPhoenix, AZ 85007(602) 771-4260 or (800) 234-5677, x7714260co1@azdeq.gov

Linda MarinerCommunity Involvement CoordinatorADEQ1110 W Washington StreetPhoenix, AZ 85007(602) 771-4294 or (800) 234-5677, x7714294mariner.linda@azdeq.gov

For more site information, visit the PGA Site Overview at:www.epa.gov/region09/phoenix-goodyearairport

Recycled/Recyclable

Printed with vegetable oil based inks on recycled paper

(minimum 50% postconsumer) process chlorine free.

If you think your home has high levels of lead:

� Get your young children tested for lead, even ifthey seem healthy.

� Wash children’s hands, bottles, pacifiers, and toysoften.

� Make sure children eat healthy, low-fat foods.

� Get your home checked for lead hazards.

� Regularly clean floors, window sills, and other surfaces.

� Wipe soil off shoes before entering house.

� Talk to your landlord about fixing surfaces withpeeling or chipping paint.

� Take precautions to avoid exposure to lead dustwhen remodeling or renovating (call 1-800-424-LEAD for guidelines).

� Don’t use a belt-sander, propane torch, hightemperature heat gun, scraper, or sandpaper onpainted surfaces that may contain lead.

� Don’t try to remove lead-based paint yourself.

Simple Steps To Protect Your Family From Lead Hazards Protect

YourFamilyFromLead InYourHome

United States EnvironmentalProtection Agency

United StatesConsumer ProductSafety Commission

United StatesDepartment of Housingand Urban Development

Many houses and apartments built before 1978 havepaint that contains high levels of lead (called lead-based paint). Lead from paint, chips, and dust can

pose serious health hazards if not taken care of properly.

OWNERS, BUYERS, and RENTERS areencouraged to check for lead (see page 6)before renting, buying or renovating pre-1978 housing.

Federal law requires that individuals receive certain information before renting, buying, or renovating pre-1978 housing:

LANDLORDS have to disclose known infor-mation on lead-based paint and lead-basedpaint hazards before leases take effect.Leases must include a disclosure aboutlead-based paint.

SELLERS have to disclose known informa-tion on lead-based paint and lead-basedpaint hazards before selling a house. Salescontracts must include a disclosure aboutlead-based paint. Buyers have up to 10days to check for lead.

RENOVATORS disturbing more than 2 squarefeet of painted surfaces have to give youthis pamphlet before starting work.

Are You Planning To Buy, Rent, or Renovatea Home Built Before 1978?

IMPORTANT!

Lead From Paint, Dust, andSoil Can Be Dangerous If Not

Managed Properly

FACT: Lead exposure can harm young

children and babies even before they

are born.

FACT: Even children who seem healthy can

have high levels of lead in their bodies.

FACT: People can get lead in their bodies by

breathing or swallowing lead dust, or by

eating soil or paint chips containing

lead.

FACT: People have many options for reducing

lead hazards. In most cases, lead-based

paint that is in good condition is not a

hazard.

FACT: Removing lead-based paint improperly

can increase the danger to your family.

If you think your home might have lead hazards, read this pamphlet to learn some

simple steps to protect your family.

1

2

People can get lead in their body if they:

� Breathe in lead dust (especially duringrenovations that disturb painted surfaces).

� Put their hands or other objects covered with lead dust in their mouths.

� Eat paint chips or soil that containslead.

Lead is even more dangerous to childrenunder the age of 6:

� At this age children’s brains and nervoussystems are more sensitive to the dam-aging effects of lead.

� Children’s growing bodies absorb morelead.

� Babies and young children often puttheir hands and other objects in theirmouths. These objects can have leaddust on them.

Lead is also dangerous to women ofchildbearing age:

� Women with a high lead level in theirsystem prior to pregnancy would exposea fetus to lead through the placentaduring fetal development.

Lead Gets in the Body in Many Ways

Childhoodleadpoisoningremains amajorenvironmen-tal healthproblem inthe U.S.

Even childrenwho appearhealthy canhave danger-ous levels oflead in theirbodies.

3

Lead’s Effects

It is important to know that even exposureto low levels of lead can severely harm children.

In children, lead can cause:

� Nervous system and kidney damage.

� Learning disabilities, attention deficitdisorder, and decreased intelligence.

� Speech, language, and behavior problems.

� Poor muscle coordination.

� Decreased muscle and bone growth.

� Hearing damage.

While low-lead exposure is most common, exposure to high levels of lead can have devastating effects onchildren, including seizures, uncon-sciousness, and, in some cases, death.

Although children are especially susceptible to lead exposure, lead can be dangerous for adults too.

In adults, lead can cause:

� Increased chance of illness duringpregnancy.

� Harm to a fetus, including brain damage or death.

� Fertility problems (in men and women).

� High blood pressure.

� Digestive problems.

� Nerve disorders.

� Memory and concentration problems.

� Muscle and joint pain.

Brain or Nerve Damage

Slowed

Growth

Hearing

Problems

Reproductive

Problems

Adults)

Digestive

Problems

Lead affectsthe body inmany ways.

4

Many homes built before 1978 have lead-based paint. The federal governmentbanned lead-based paint from housing in1978. Some states stopped its use evenearlier. Lead can be found:

� In homes in the city, country, or suburbs.

� In apartments, single-family homes, andboth private and public housing.

� Inside and outside of the house.

� In soil around a home. (Soil can pick uplead from exterior paint or other sourcessuch as past use of leaded gas in cars.)

To reduce your child's exposure to lead,get your child checked, have your hometested (especially if your home has paintin poor condition and was built before1978), and fix any hazards you may have.Children's blood lead levels tend to increaserapidly from 6 to 12 months of age, andtend to peak at 18 to 24 months of age.

Consult your doctor for advice on testingyour children. A simple blood test candetect high levels of lead. Blood tests areusually recommended for:

� Children at ages 1 and 2.

� Children or other family members whohave been exposed to high levels of lead.

� Children who should be tested underyour state or local health screening plan.

Your doctor can explain what the test resultsmean and if more testing will be needed.

Get yourchildren andhome testedif you thinkyour homehas high lev-els of lead.

Checking Your Family for Lead

Where Lead-Based Paint Is Found

In general,the older yourhome, themore likely ithas lead-based paint.

Lead-based paint is usually not a hazard ifit is in good condition, and it is not on animpact or friction surface, like a window. Itis defined by the federal government aspaint with lead levels greater than or equalto 1.0 milligram per square centimeter, ormore than 0.5% by weight.

Deteriorating lead-based paint (peeling,chipping, chalking, cracking or damaged)is a hazard and needs immediate attention.It may also be a hazard when found on sur-faces that children can chew or that get alot of wear-and-tear, such as:

� Windows and window sills.

� Doors and door frames.

� Stairs, railings, banisters, and porches.

Lead dust can form when lead-based paint is scraped, sanded, orheated. Dust also forms when painted surfaces bump or rub togeth-er. Lead chips and dust can get on surfaces and objects that peopletouch. Settled lead dust can re-enter the air when people vacuum,sweep, or walk through it. The following two federal standards havebeen set for lead hazards in dust:

� 40 micrograms per square foot (µg/ft2) and higher for floors,including carpeted floors.

� 250 µg/ft2 and higher for interior window sills.

Lead in soil can be a hazard when children play in bare soil orwhen people bring soil into the house on their shoes. The followingtwo federal standards have been set for lead hazards in residentialsoil:

� 400 parts per million (ppm) and higher in play areas of bare soil.

� 1,200 ppm (average) and higher in bare soil in the remainder ofthe yard.

The only way to find out if paint, dust and soil lead hazards exist isto test for them. The next page describes the most common meth-ods used.

Lead frompaint chips,which youcan see, andlead dust,which youcan’t alwayssee, can bothbe serious hazards.

Identifying Lead Hazards

5

6

You can get your home tested for lead inseveral different ways:

� A paint inspection tells you whether yourhome has lead-based paint and where itis located. It won’t tell you whether or notyour home currently has lead hazards.

� A risk assessment tells you if your homecurrently has any lead hazards from leadin paint, dust, or soil. It also tells you whatactions to take to address any hazards.

� A combination risk assessment andinspection tells you if your home has any lead hazards and if your home hasany lead-based paint, and where thelead-based paint is located.

Hire a trained and certified testing profes-sional who will use a range of reliablemethods when testing your home.

� Visual inspection of paint condition and location.

� A portable x-ray fluorescence (XRF)machine.

� Lab tests of paint, dust, and soilsamples.

There are state and federal programs inplace to ensure that testing is done safely,reliably, and effectively. Contact your stateor local agency (see bottom of page 11) formore information, or call 1-800-424-LEAD(5323) for a list of contacts in your area.

Home test kids for lead are available, butmay not always be accurate. Consumersshould not rely on these kits before doingrenovations or to assure safety.

Checking Your Home for Lead

Just knowingthat a homehas lead-based paintmay not tellyou if there is a hazard.

7

If you suspect that your house has leadhazards, you can take some immediatesteps to reduce your family’s risk:

� If you rent, notify your landlord ofpeeling or chipping paint.

� Clean up paint chips immediately.

� Clean floors, window frames, windowsills, and other surfaces weekly. Use amop or sponge with warm water and ageneral all-purpose cleaner or a cleanermade specifically for lead. REMEMBER:NEVER MIX AMMONIA AND BLEACHPRODUCTS TOGETHER SINCE THEYCAN FORM A DANGEROUS GAS.

� Thoroughly rinse sponges and mopheads after cleaning dirty or dustyareas.

� Wash children’s hands often, especial-ly before they eat and before nap timeand bed time.

� Keep play areas clean. Wash bottles,pacifiers, toys, and stuffed animals regularly.

� Keep children from chewing windowsills or other painted surfaces.

� Clean or remove shoes beforeentering your home to avoidtracking in lead from soil.

� Make sure children eat nutritious, low-fat meals high in iron and calcium, such asspinach and dairy products.Children with good diets absorbless lead.

What You Can Do Now To Protect Your Family

8

In addition to day-to-day cleaning and goodnutrition:

� You can temporarily reduce lead hazardsby taking actions such as repairing dam-aged painted surfaces and planting grassto cover soil with high lead levels. Theseactions (called “interim controls”) are notpermanent solutions and will need ongo-ing attention.

� To permanently remove lead hazards,you should hire a certified lead “abate-ment” contractor. Abatement (or perma-nent hazard elimination) methodsinclude removing, sealing, or enclosinglead-based paint with special materials.Just painting over the hazard with regularpaint is not permanent removal.

Always hire a person with special trainingfor correcting lead problems—someonewho knows how to do this work safely andhas the proper equipment to clean up thoroughly. Certified contractors will employqualified workers and follow strict safetyrules as set by their state or by the federalgovernment.

Once the work is completed, dust cleanupactivities must be repeated until testingindicates that lead dust levels are below thefollowing:

� 40 micrograms per square foot (µg/ft2)for floors, including carpeted floors;

� 250 µg/ft2 for interior windows sills; and

� 400 µg/ft2 for window troughs.

Call your state or local agency (see bottomof page 11) for help in locating certifiedprofessionals in your area and to see iffinancial assistance is available.

Reducing Lead Hazards In The Home

Removingleadimproperlycan increasethe hazard toyour familyby spreadingeven morelead dustaround thehouse.

Always use a professional whois trained toremove lead hazards safely.

Take precautions before your contractor oryou begin remodeling or renovating any-thing that disturbs painted surfaces (suchas scraping off paint or tearing out walls):

� Have the area tested for lead-basedpaint.

� Do not use a belt-sander, propanetorch, high temperature heat gun, dryscraper, or dry sandpaper to removelead-based paint. These actions createlarge amounts of lead dust and fumes.Lead dust can remain in your homelong after the work is done.

� Temporarily move your family (espe-cially children and pregnant women)out of the apartment or house until the work is done and the area is prop-erly cleaned. If you can’t move yourfamily, at least completely seal off thework area.

� Follow other safety measures toreduce lead hazards. You can find outabout other safety measures by calling 1-800-424-LEAD. Ask for the brochure“Reducing Lead Hazards WhenRemodeling Your Home.” This brochureexplains what to do before, during, and after renovations.

If you have already completed renova-

tions or remodeling that could have

released lead-based paint or dust, get

your young children tested and follow

the steps outlined on page 7 of this

brochure.

Remodeling or Renovating a Home WithLead-Based Paint

If not conductedproperly, certain typesof renova-tions canrelease leadfrom paintand dust intothe air.

9

10

� Drinking water. Your home might haveplumbing with lead or lead solder. Callyour local health department or watersupplier to find out about testing yourwater. You cannot see, smell, or tastelead, and boiling your water will not getrid of lead. If you think your plumbingmight have lead in it:

• Use only cold water for drinking andcooking.

• Run water for 15 to 30 secondsbefore drinking it, especially if youhave not used your water for a fewhours.

� The job. If you work with lead, youcould bring it home on your hands orclothes. Shower and change clothesbefore coming home. Launder your workclothes separately from the rest of your family’s clothes.

� Old painted toys and furniture.

� Food and liquids stored in lead crystalor lead-glazed pottery or porcelain.

� Lead smelters or other industries thatrelease lead into the air.

� Hobbies that use lead, such as makingpottery or stained glass, or refinishingfurniture.

� Folk remedies that contain lead, such as“greta” and “azarcon” used to treat anupset stomach.

Other Sources of Lead

While paint, dust,and soil are themost commonsources of lead,other leadsources also exist.

11

The National Lead Information Center

Call 1-800-424-LEAD (424-5323) to learnhow to protect children from lead poisoningand for other information on lead hazards.To access lead information via the web, visitwww.epa.gov/lead andwww.hud.gov/offices/lead/.

EPA’s Safe Drinking Water Hotline

Call 1-800-426-4791 for information aboutlead in drinking water.

Consumer Product Safety Commission (CPSC) Hotline

To request information on lead inconsumer products, or to report anunsafe consumer product or a prod-uct-related injury call 1-800-638-2772, or visit CPSC's Web site at:www.cpsc.gov.

Health and Environmental AgenciesSome cities, states, and tribes havetheir own rules for lead-based paintactivities. Check with your local agency tosee which laws apply to you. Most agenciescan also provide information on finding alead abatement firm in your area, and onpossible sources of financial aid for reducinglead hazards. Receive up-to-date addressand phone information for your local con-tacts on the Internet at www.epa.gov/leador contact the National Lead InformationCenter at 1-800-424-LEAD.

For More Information

For the hearing impaired, call the Federal Information Relay Service at 1-800-877-8339 to access any of

the phone numbers in this brochure.

12

EPA Regional Offices

Region 1 (Connecticut, Massachusetts,Maine, New Hampshire, Rhode Island,Vermont)

Regional Lead ContactU.S. EPA Region 1Suite 1100 (CPT)One Congress StreetBoston, MA 02114-2023 1 (888) 372-7341

Region 2 (New Jersey, New York,Puerto Rico, Virgin Islands)

Regional Lead ContactU.S. EPA Region 22890 Woodbridge AvenueBuilding 209, Mail Stop 225Edison, NJ 08837-3679(732) 321-6671

Region 3 (Delaware, Maryland,Pennsylvania, Virginia, Washington DC,West Virginia)

Regional Lead ContactU.S. EPA Region 3 (3WC33)1650 Arch StreetPhiladelphia, PA 19103(215) 814-5000

Region 4 (Alabama, Florida, Georgia,Kentucky, Mississippi, North Carolina,South Carolina, Tennessee)

Regional Lead ContactU.S. EPA Region 461 Forsyth Street, SWAtlanta, GA 30303(404) 562-8998

Region 5 (Illinois, Indiana, Michigan,Minnesota, Ohio, Wisconsin)

Regional Lead ContactU.S. EPA Region 5 (DT-8J)77 West Jackson BoulevardChicago, IL 60604-3666(312) 886-6003

EPA Regional Offices

Region 6 (Arkansas, Louisiana, NewMexico, Oklahoma, Texas)

Regional Lead ContactU.S. EPA Region 61445 Ross Avenue, 12th FloorDallas, TX 75202-2733(214) 665-7577

Region 7 (Iowa, Kansas, Missouri,Nebraska)

Regional Lead ContactU.S. EPA Region 7(ARTD-RALI)901 N. 5th StreetKansas City, KS 66101(913) 551-7020

Region 8 (Colorado, Montana, NorthDakota, South Dakota, Utah, Wyoming)

Regional Lead ContactU.S. EPA Region 8999 18th Street, Suite 500Denver, CO 80202-2466(303) 312-6021

Region 9 (Arizona, California, Hawaii,Nevada)

Regional Lead Contact U.S. Region 975 Hawthorne StreetSan Francisco, CA 94105(415) 947-4164

Region 10 (Alaska, Idaho, Oregon,Washington)

Regional Lead ContactU.S. EPA Region 10Toxics Section WCM-1281200 Sixth AvenueSeattle, WA 98101-1128(206) 553-1985

Your Regional EPA Office can provide further information regard-ing regulations and lead protection programs.

CPSC Regional Offices

Eastern Regional CenterConsumer Product Safety Commission201 Varick Street, Room 903New York, NY 10014(212) 620-4120

Central Regional CenterConsumer Product Safety Commission230 South Dearborn Street, Room 2944Chicago, IL 60604(312) 353-8260

Western Regional CenterConsumer Product Safety Commission1301 Clay Street, Suite 610-NOakland, CA 94612(510) 637-4050

HUD Lead Office

13

Please contact HUD's Office of Healthy Homes and Lead HazardControl for information on lead regulations, outreach efforts, andlead hazard control and research grant programs.

U.S. Department of Housing and Urban DevelopmentOffice of Healthy Homes and Lead Hazard Control451 Seventh Street, SW, P-3206Washington, DC 20410(202) 755-1785

Your Regional CPSC Office can provide further information regard-ing regulations and consumer product safety.

U.S. EPA Washington DC 20460 EPA747-K-99-001

U.S. CPSC Washington DC 20207 June 2003

U.S. HUD Washington DC 20410

This document is in the public domain. It may be reproduced by an individual ororganization without permission. Information provided in this booklet is basedupon current scientific and technical understanding of the issues presented andis reflective of the jurisdictional boundaries established by the statutes governingthe co-authoring agencies. Following the advice given will not necessarily pro-vide complete protection in all situations or against all health hazards that canbe caused by lead exposure.

PHOENIX ASSOCIATION OF REALTORS® SUMMARY POOL BARRIER LAWS

Caution: As a REALTOR® you should inform buyers and sellers of the existence of these laws. This outline provides an overview of certain key provisions for comparison purposes only. This outline does not contain all applicable provisions of the laws that are included and is not necessarily up to date. It should not be relied upon for legal or liability purposes. For more complete information, you should obtain and read the entire current law and consult both the applicable governmental agency and your own legal counsel. File: Pool Ordinance Table Summary updated 12/02 QBP01\word-291448.1

1

KEY

PROVISIONS

STATE OF ARIZONA

MARICOPA COUNTY

PHOENIX

EFFECTIVE DATE

June 1, 1992 for all new pools only.

Revised 8-6-99

May 4, 1990 for all new pools and alterations or additions. May 4, 1991 retroactively provision for existing pools.

APPLICABILITY

All new pools in communities that do not have their own ordinances prior to June 1, 1991. Does not apply to pools built prior to June 1, 1991. Bodies of water at least 18 inches deep and 8 feet wide.

Bodies of water at least 18 inches deep

All new pools within city limits after May 4, 1990. All existing pools in which children under 6 occupy the residence or regularly visit the property.

BARRIER OPTIONS

Fences or walls. Key operated, motorized safety covers. Self-closing & self-latching rear doors.

Fences or walls. Key operated, motorized safety covers. Self-closing & self-latching rear doors.

Fences or walls. Key operated, motorized safety covers. Self-closing & self-latching rear doors.

FENCE & WALL

STANDARDS

5 foot minimum. At least 20 inches from waters edge. No gaps or openings larger than 4 inches. Horizontal bars must have a minimum separation of 45 inches.

5 foot minimum. Must contain no openings greater than 1 3/4 inches. At least 20 inches from waters edge. Horizontal bars must have a minimum separation of 54 inches. Chain link not less than 11 gauge.

5 foot minimum (4 ft. fences existing prior to May 4, 1990 are grandfathered in). No gaps or openings larger than 4 inches. Horizontal bars must have a minimum separation of 45 inches. Wire mesh or chain link shall have a maximum opening of 1-3/4 inches measured horizontally.

GATE & LATCH

STANDARDS

Must be self closing & self latching. Latches a minimum of 54 inches above ground. Must open outward away from pool.

5 foot minimum height. Must be self-closing, lockable & self-latching with latch 54 inches above ground . Must open outward away from pool.

5 foot minimum height. Must be self-closing & self-latching & lockable. Latches a minimum of 54 inches above ground. Must open outward away from pool. Gates over 4 feet must be padlocked if not self-closing/self-latching.

WINDOWS/

DOORS

Bedroom windows equipped with latch 54 inches above floor. Other windows latched or secured to prevent openings more than 4 inches or secured-in-place wire mesh screen. Doors: self-latching with latch at least 54 inches above floor.

Bedroom windows equipped with latch 54 inches above floor. Other windows latched or secured to prevent opening more than 4 inches or screwed-in- place wire mesh screen. Doors: self-closing, self-latching with latch at least 54 inches above floor or alarmed.

Bedroom windows equipped with latch must be 54 inches above floor. Other windows latched or secured to prevent opening more than 4 inches may be used or screwed-in-place wire mesh screen. Windows less than 60 inches above pool deck and within 5 feet of waters edge must be tempered glass. Doors: self-closing and self-latching with latch at least 54 inches above floor. No pet doors allowed.

RESPONSIBLE

PARTY

Not clearly delineated. There is a provision requiring a person selling or leasing a dwelling to give the buyer or renter a "notice" explaining responsible pool ownership. One interpretation is the real estate agent must give the notice. It is available at DHS or ADRE or PAR.

Owner's responsibility.

Pool owner.

EXEMPTIONS

All pools in existence before June 1, 1991. Residences where all occupants are at least 6 years old. Irrigation canals or drainage works, troughs and structures used in agricultural practices and public swimming pools.

Spas and hot tubs 8 feet or less in diameter provided they have an approved safety cover. Above ground pools (different standards apply). Existing pools where children under the age of 6 do not occupy the residence.

CONTACT

Law Library - 542-5297

Planning/Building/Zoning Dept. - 506-3301

Construction Permit Services - 262-7884

PHOENIX ASSOCIATION OF REALTORS®

SUMMARY POOL BARRIER LAWS

Caution: As a REALTOR® you should inform buyers and sellers of the existence of these laws. This outline provides an overview of certain key provisions for comparison purposes only. This outline does not contain all applicable provisions of the laws that are included and is not necessarily up to date. It should not be relied upon for legal or liability purposes. For more complete information, you should obtain and read the entire current law and consult both the applicable governmental agency and your own legal counsel. File: Pool Ordinance Table Summary updated 12/02 QBP01\word-291448.1

2

KEY

PROVISIONS

SCOTTSDALE

PARADISE VALLEY

FOUNTAIN HILLS

EFFECTIVE DATE

July 20, 1995

October 9, 1999

November 18, 1993

APPLICABILITY

All temporary, portable or permanent in-ground, above-ground, on-ground pools, hot tubs and spas and fish ponds constructed after enactment of ordinance.

Bodies of water at least 18 inches deep and 8 feet wide.

Bodies of water at least 18 inches deep and 8 feet in width.

BARRIER OPTIONS

Fences & Walls. Key operated, motorized safety covers with switch at least 54 inches above deck or ground. Self-closing & self-latching alarm equipped rear doors.

Fence and wall. Alarmed, self-locking and self-latching doors. Motorized safety cover.

Fences & Walls.

FENCE & WALL

STANDARDS

Perimeter fencing used as part of barrier must be 5 feet and internal barrier must be 4 feet. At least 20 inches from waters edge. No gaps or openings larger than 1-3/4 inch diameter (with exceptions for vertical openings) Horizontal bars must have a minimum separation of 45 inches. Chain link shall not be less than 11 gauge.

5 foot minimum. No gaps or openings larger than 4 inches. Horizontal bars must have a minimum separation of 45 inches. 11 gauge chain link fencing permitted.

5 ft. minimum. No gaps or openings larger than 4 inches. Horizontal bars must have a minimum separation of 54 inches.

GATE & LATCH

STANDARDS

5 foot minimum height. Must be self-closing & self-latching & lockable. Latches a minimum of 54 inches above ground. Must open outward away from pool.

Self-closing and self-latching with latch at least 54 inches above ground. Open away from pool. Lockable.

5 foot minimum height. Must be self-closing & self-latching & lockable. Latches a minimum of 50 inches above ground. Must open outward away from pool.

WINDOWS/

DOORS

No section on windows. Doors: self-closing and self-latching with release mechanism at least 54 inches above floor; or alarm installed on door at least 54 inches above floor threshold.

No section on windows. Doors: self-closing, self-latching with latch at least 54 inches above floor, or alarmed.

No section on windows or doors.

RESPONSIBLE

PARTY

If a new pool, the Builder/Installer is responsible for informing the pool owner of barrier requirements, otherwise owner/tenant.

Owner's responsibility.

EXEMPTIONS

Pools constructed before July 15, 1992 must only comply with 54 inch fencing and gate requirement. Pools constructed from July 15, 1992 until July 20, 1995, must meet all current requirements except perimeter fence height need only be 54 inches.

Self-contained spa or hot tub.

CONTACT

Building Code Official - 994-2633

Town Attorney - 948-7411

Plng. /Zoning/Bldg. Sfty. Dept. - 837- 2003

PHOENIX ASSOCIATION OF REALTORS®

SUMMARY POOL BARRIER LAWS

Caution: As a REALTOR® you should inform buyers and sellers of the existence of these laws. This outline provides an overview of certain key provisions for comparison purposes only. This outline does not contain all applicable provisions of the laws that are included and is not necessarily up to date. It should not be relied upon for legal or liability purposes. For more complete information, you should obtain and read the entire current law and consult both the applicable governmental agency and your own legal counsel. File: Pool Ordinance Table Summary updated 12/02 QBP01\word-291448.1

3

KEY

PROVISIONS

LITCHFIELD PARK

BUCKEYE

ELOY, GILA BEND, SUPERIOR

EFFECTIVE DATE

June 1989

August 19, 1996 original adoption date March 21, 2000 revised

No ordinance. Requires compliance with state law. See State of Arizona section.

APPLICABILITY

All new pools in communities that do not have their own ordinances prior to June 1, 1991. Does not apply to pools built prior to June 1, 1991. Bodies of water at least 18 inches deep and 8 feet wide.

A swimming pool, or other contained body of water that contains water 18 inches or more in depth or wider than 4 feet at any point.

BARRIER OPTIONS

Fences or walls. Key operated, motorized safety covers. Self-closing & self-latching rear doors.

Fences & Walls.

FENCE & WALL

STANDARDS

5 foot minimum. At least 20 inches from waters edge. No gaps or openings larger than 4 inches. Horizontal bars must have a minimum separation of 45 inches. Motorized pool cover permitted.

5 foot minimum. At least 20 inches from waters edge. No gaps or openings larger than 4 inches. Horizontal bars must have a minimum separation of 54 inches. Components placed on pool side of barrier or wire mesh and chain link fence shall have a maximum size of 1-3/4 inches measured horizontally.

GATE & LATCH

STANDARDS

5 foot minimum height. Must be self-closing & self-latching or lockable. Must open away from the pool. Latches a minimum of 54 inches above ground.

Must be self-closing, self-latching & lockable. Latches a minimum of 54 inches above ground. Must open outward away from pool.

WINDOWS/

DOORS

Bedroom windows equipped with latch 54 inches above floor. Other windows latched or secured to prevent openings more than 4 inches or secured-in-place wire mesh screen. Doors: self-latching with latch at least 54 inches above floor.

A building with window or door openings cannot be used as part of the fence structure enclosing the pool.

RESPONSIBLE

PARTY

Any person in possession of land, as owner, purchaser under contract, lessee, tenant or licensee.

EXEMPTIONS

All pools in existence before June 1, 1991. Residences where all occupants are at least 6 years old. Irrigation canals or drainage works, troughs and structures used in agricultural practices and public swimming pools.

Irrigation canals or drainage works, troughs and structures used in agricultural practices and public swimming pools.

CONTACT

Planning & Zoning Department - 623-935-5033

Planning and Zoning Dept. 623-386-4691

Gila Bend - 256-7856 Superior -(520)689-5752

PHOENIX ASSOCIATION OF REALTORS®

SUMMARY POOL BARRIER LAWS

Caution: As a REALTOR® you should inform buyers and sellers of the existence of these laws. This outline provides an overview of certain key provisions for comparison purposes only. This outline does not contain all applicable provisions of the laws that are included and is not necessarily up to date. It should not be relied upon for legal or liability purposes. For more complete information, you should obtain and read the entire current law and consult both the applicable governmental agency and your own legal counsel. File: Pool Ordinance Table Summary updated 12/02 QBP01\word-291448.1

4

KEY

PROVISIONS

GLENDALE

PEORIA

APACHE JUNCTION

EFFECTIVE DATE

Original ordinance December 8, 1998; Revised February 1, 1999

July 26, 1988

February 14, 1991 for all new pools. February 14, 1992 retroactively provision for existing pools.

APPLICABILITY

Body of water at least 18 inches deep. Body of water where child under age 6 resides. Hot tub, spas.

Pools, hot tubs and spas with depth of 18 inches or more.

All new pools, additions, alterations, repairs or replacements after February 14, 1991. All existing pools in which children under 6 occupy the residence. Bodies of water at least 18 inches deep.

BARRIER OPTIONS

Fences & Walls. Self-closing & self-latching rear doors.

Fences & Walls. Audible alarm on windows and doors.

Fences & Walls. Key operated, motorized safety covers. Self-closing & self-latching doors.

FENCE & WALL

STANDARDS

5 foot minimum. No gaps or openings larger than 4 inches. Horizontal gaps at least 45 inches apart. Wire mesh or chain link maximum 1 3/4 inch size. At least 20 inches from water edge.

5 foot minimum.

5 foot minimum (4 ft. fences existing prior to February 14, 1991 are grandfathered in). At least 20 inches from waters edge. No gaps or openings larger the 4 inches. Horizontal bars must have a minimum separation of 45 inches. Wire mesh or chain link with maximum mesh size of 4 3/4 inches.

GATE & LATCH

STANDARDS

5 foot minimum height. Must be self-closing & self-latching. Latches a minimum of 54 inches above ground. Open away from pool. Gates wider than 48 inches must be padlocked or otherwise locked.

5 foot minimum height. Must be self-closing & self-latching or lockable. Latches a minimum of 54 inches above ground. Must open outward away from pool. Pool mechanisms shall be on pool side of gate at least 3 inches below top of gate. Doors giving direct pool access must be equipped with an audible alarm.

5 foot minimum height. Must be self-closing, self-latching & lockable. Latches a minimum of 54 inches above ground. Must open outward away from pool.

WINDOWS/

DOORS

Self-latching devices or audible alarms. Bedroom windows equipped with latch at least 54 inches above ground. Other windows latched or secured with screwed-in-place mesh screen.

Shall have a wire mesh screen. Bedroom windows equipped with latch 54 inches above floor. Other windows latched or secured to prevent opening more than 4 inches. Doors: if direct-access to pool, alarm or self-closing, self-latching with latch at least 54 inches above ground.

Bedroom windows to be equipped with latch 54 inches above floor. Other windows latched or secured to prevent opening more than 4 inches or located 54 inches above ground. Doors: self-closing, self-latching, lockable with latch at least 54 inches above floor.

RESPONSIBLE

PARTY Owner or occupant.

Property owner and any other person in responsible charge.

Property owner and any other person in responsible charge of the pool.

EXEMPTIONS

Sumps, irrigation canals, flood control/drainage facilities, ponds, public swimming pools.

Above ground pools - different standards apply.

Above ground pools (different standards apply). Existing pools where children under age 6 do not occupy the residence.

CONTACT Development Services Group – 623-930-2800

Plng. /Zoning / Bldg. Sfty. Dept. - 623-773-7200

Planning Department - 480-982-8002

PHOENIX ASSOCIATION OF REALTORS®

SUMMARY POOL BARRIER LAWS

Caution: As a REALTOR® you should inform buyers and sellers of the existence of these laws. This outline provides an overview of certain key provisions for comparison purposes only. This outline does not contain all applicable provisions of the laws that are included and is not necessarily up to date. It should not be relied upon for legal or liability purposes. For more complete information, you should obtain and read the entire current law and consult both the applicable governmental agency and your own legal counsel. File: Pool Ordinance Table Summary updated 12/02 QBP01\word-291448.1

5

KEY

PROVISIONS

MESA

TEMPE

CHANDLER

EFFECTIVE DATE

August 15, 1996

April 12, 1992.

August 7, 1993 for all new pools.

APPLICABILITY

Pools or other bodies of water 18 inches or more in depth or wider than 8 feet.

Outdoor swimming and wading pool, hot tub or spa.

All new pools installed after August 7, 1993. Does not apply to pools built prior to June 1, 1991.

BARRIER OPTIONS

Fences & Walls. Key operated motorized safety cover that meets requirements. Above ground non-climbable sides that meets requirements.

Fences & Walls.

Fences & Walls. Key operated, motorized safety covers.

FENCE & WALL

STANDARDS

5 foot minimum. At least 20 inches from water�s edge. No gaps or openings larger than 4 inches. Horizontal components not less than 45 inches apart. Wire mesh or chain link maximum size of 1/3-4 inches horizontal.

5 foot minimum. No gaps or openings larger than 4 inches.

5 foot minimum. At least 20 inches from waters edge. No gaps or openings larger than 4 inches. Horizontal members shall be spaced not less than 45 inches apart.

GATE & LATCH

STANDARDS

Must be self-closing & self-latching with latch at least 54 inches above the ground &, if 4 feet or wider, must be secured by a padlock, lockable hardware or electric opener.

5 foot minimum height. Must be self-closing & self-latching or lockable. No gaps or openings larger than 4 inches.

5 foot minimum height. Must be self-closing & self-latching & lockable. Latches a minimum of 54 inches above ground. Must open outward away from pool.

WINDOWS/

DOORS

Sleeping room windows equipped with latch 54 inches above floor, or secured not to open more than 4 inches.

Bedroom windows equipped with latch 54 inches above floor. Other windows latched or secured to prevent opening more than 4 inches.

RESPONSIBLE

PARTY Owner and any other person in responsible charge.

Both the property owner and occupant.

Property owner and any other person in responsible charge.

EXEMPTIONS

In residential districts, contained bodies of water less than 18 inches above or below ground and less than 8 feet. Irrigation and storm water retention facilities, water features in public parks and golf courses, flood control facilities.

Premises that adjoin the body of water recorded as Tract S of The Lakes, need not have an enclosure parallel to the bank. Pools on the premises of a hotel or motel. Pools less than 18 inches.

Above ground pools with non-climbable sides not less than 48 inches high (different standards required).

CONTACT

Devel./Plng./Zoning Svc. - 480-644-2185

Planning Division/Bldg. Safety - 480-350-8341

Planning & Development - 480-782-3107

PHOENIX ASSOCIATION OF REALTORS®

SUMMARY POOL BARRIER LAWS

Caution: As a REALTOR® you should inform buyers and sellers of the existence of these laws. This outline provides an overview of certain key provisions for comparison purposes only. This outline does not contain all applicable provisions of the laws that are included and is not necessarily up to date. It should not be relied upon for legal or liability purposes. For more complete information, you should obtain and read the entire current law and consult both the applicable governmental agency and your own legal counsel. File: Pool Ordinance Table Summary updated 12/02 QBP01\word-291448.1

6

KEY

PROVISIONS

CAREFREE

CAVE CREEK

CASA GRANDE

EFFECTIVE DATE

June 6, 1991 for all new pools only.

January 1, 1995 for existing pools; July 7, 1994 for new pools

May 1997

APPLICABILITY

All new pools or bodies of water containing 18 inches of water or more that is wider than 8 feet, installed on or after June 6, 1991, and to all additions, alterations, repairs or replacements made to existing enclosures. Does not apply to pools built prior to June 1, 1991.

All new pools installed on or after July 7, 1994, all additions, alterations, repairs or replacements made to existing enclosures. Pools built prior to July 7, 1994, must comply by January 1, 1995.

Outdoor swimming pools & spas.

BARRIER OPTIONS

Fences & Walls.

Fences & Walls. Key operated, motorized safety covers with switch at least 54 inches above ground. Self-closing & self-latching rear doors.

Fences & Walls.

FENCE & WALL

STANDARDS

4 ½ foot minimum. No gaps or openings larger than 4 inches. Horizontal bars must have a minimum separation of 45 inches.

5 foot minimum. At least 20 inches from waters edge. No gaps or openings larger than 4 inches. Horizontal bars must have a minimum separation of 45 inches.

5 foot minimum.. No gaps or openings larger than 4 inches. Vertical components & Wire Mesh or Chain Link fences shall have a maximum size opening of 1-3/4 inches.

GATE & LATCH

STANDARDS

4 ½ foot minimum height. Must be self-closing & self-latching & lockable. Latches a minimum of 48 inches above ground. Must open outward away from pool.

4 ½ foot minimum height. Must be self-closing & self-latching or lockable for pools installed after July 7, 1994. Must open away from pool. Latches at least 54 inches above ground.

Must be self-closing & self-latching. Latches a minimum of 54 inches above ground. Must open outward away from pool.

WINDOWS/

DOORS

Doors: Self-closing and self-latching with lockable device or release mechanism at least 54 inches above floor. Windows: Latching device at least 54 inches above floor, or screwed-in-place wire mesh screen or key lock preventing opening more than 4 inches.

Windows with direct pool access must have latching device 54 inches above floor or key lock preventing opening more than 4 inches. Sleeping rooms with pool access must have latching devices or screw in wire mesh screens.

RESPONSIBLE PARTY

Property owner and any other person in responsible charge.

Property owner or other person in responsible charge.

EXEMPTIONS

Contained bodies of water less than 18 inches deep and/or less than 8 feet in width.

Pools built on single-family residential property on or before July 7, 1994, not required to be retroactively fitted with barrier between house & pool if all occupants are age 6 or older. Above ground pools have separate rules to comply with. Fences or walls less than 4 � feet in height existing on or before July 7, 1994.

CONTACT

Planning & Development - 480-488-1471

Town Hall - 480-488-1400; Building & Safety (480) 488-1414

City of Casa Grande - 520-421-8630

PHOENIX ASSOCIATION OF REALTORS®

SUMMARY POOL BARRIER LAWS

Caution: As a REALTOR® you should inform buyers and sellers of the existence of these laws. This outline provides an overview of certain key provisions for comparison purposes only. This outline does not contain all applicable provisions of the laws that are included and is not necessarily up to date. It should not be relied upon for legal or liability purposes. For more complete information, you should obtain and read the entire current law and consult both the applicable governmental agency and your own legal counsel. File: Pool Ordinance Table Summary updated 12/02 QBP01\word-291448.1

7

KEY

PROVISIONS

EL MIRAGE

WICKENBERG

SURPRISE

EFFECTIVE

DATE

September 1986

September 1991

October 31, 1998

APPLICABILITY

All private or semi-private swimming pools.

Pools containing over 18 inches of water in depth and wider than 8 feet.

BARRIER OPTIONS

Fences and walls.

Walls and fences.

Fences and walls; key operated motorized cover.

FENCE & WALL

STANDARDS

Solid wall or fence. If wrought iron fence, then vertical bars spaced no more than 4 inches. 6 foot minimum. Minimum 5 foot setback from pool edge. Minimum 5 foot setback from nearest property line. No gaps or openings larger than 4 inches.

4 foot minimum height. 2 inches maximum vertical clearance from ground.

4 foot minimum. Bottom clearance of no more than 2 inches. No gaps or openings greater than 2-4 inches, depending on structure of decking. Horizontal bars must have at least 45 inch separation. At least 20 inches from waters edge.

GATE & LATCH

STANDARDS

Self-closing, self-latching gates. Latches a minimum of 4 1/2 feet above the ground.

4 foot minimum height. Must open away from pool. Self-closing, self-latching with latch at least 54 inches above ground. No gaps or openings larger than 4 inches.

4 foot minimum. Self-closing, self-latching. Latches at least 54 inches above bottom of gate. Open away from pool. Lockable hardware or padlocks. Gates must include sign.

WINDOWS/

DOORS

Alarmed, self-closing, self-latching.

Doors: self-closing, self-latching with release mechanism at least 54 inches above floor; or alarm. No pet doors providing direct access to pool. Windows: latching device at least 54 inches above floor or key lock if window not leading directly to pool.

RESPONSIBLE PARTY

Owner, renter, occupier of premises, or other person in responsible charge.

EXEMPTIONS

CONTACT

Planning and Zoning Department 623-972-8116

Planning and Building Dept. 520-684-5451

Planning and Zoning Department. 623-583-1088

PHOENIX ASSOCIATION OF REALTORS®

SUMMARY POOL BARRIER LAWS

Caution: As a REALTOR® you should inform buyers and sellers of the existence of these laws. This outline provides an overview of certain key provisions for comparison purposes only. This outline does not contain all applicable provisions of the laws that are included and is not necessarily up to date. It should not be relied upon for legal or liability purposes. For more complete information, you should obtain and read the entire current law and consult both the applicable governmental agency and your own legal counsel. File: Pool Ordinance Table Summary updated 12/02 QBP01\word-291448.1

8

KEY

PROVISIONS

AVONDALE

GILBERT

EFFECTIVE DATE June 1, 1991

November 10, 1987

APPLICABILITY Pool or body of water containing at least 18 inches deep and wider than 8 feet.

Pool, hot tub, spa at least 18 inches deep.

BARRIER OPTIONS Fence or wall; motorized, key-operated pool cover.

Fences and walls.

FENCE & WALL

STANDARDS

5 foot minimum. No gaps or openings larger than 4 inches. Horizontal bars must have minimum 45 inches. Wire mesh or chain link fence minimum mesh size of 1 3/4 inches. At least 20 inches from waters edge.

Minimum 4 feet. No openings larger than 1 3/4 inches measured horizontally. Chain link fences not less than 11 gauge and have a maximum mesh size of 1 ¾ inches. At least 20 inches from waters edge.

GATE & LATCH

STANDARDS

Self-closing, self-latching. Latch at least 54 inches above ground or padlock. Open away from pool.

Minimum 4 feet. Self-closing, self-latching located on pool side of gate and at least 5 inches below the top of the gate. Padlock if double-wide gate. No openings greater than ½ inch.

WINDOWS/

DOORS

Doors: self-latching. Windows: latching device at least 54 inches above floor if direct access to pool. All other windows: secured-in-place wire mesh screen or keyed lock preventing opening greater than 4 inches.

RESPONSIBLE

PARTY

EXEMPTIONS

Irrigation canals, flood control/drainage facilities, stock ponds, public pools, residence with all residents over age 6.

CONTACT

Planning & Zoning: 623-932-1909

Planning and Zoning: 480-503-6000