Solving Real Estate Legal Problems in Arizona, a Conversation on the Phoenix Prosperity Podcast

Patrick Nackley joined Tim Fergestad, Ph.D., on the Phoenix Prosperity Podcast on October 1, 2026, for a 34 minute conversation about what happens when an Arizona real estate deal starts to go wrong. The episode covers the paperwork problems that can follow a fast moving transaction, the role emotion plays once a dispute begins, why resolving a problem early can be the better economic decision, and the limits of artificial intelligence as a source of legal information. The video, a summary of the main points, answers to the questions the episode raises, and a full transcript follow.

What the Conversation Covers

The contract still matters, even in a fast deal (8:07). Real estate deals are often time sensitive. That pressure can produce amendments and addendums written quickly, and the paperwork may not reflect every term the parties agreed to. Patrick describes putting a quickly drafted addendum in front of ten people and getting eleven opinions on what it means. Many transactions close anyway, because the financing holds, the timing holds, and the parties work through the gaps orally. The paperwork problem surfaces when one of those elements fails.

Brokers and agents are often the first to see a problem (11:45). A buyer or seller often brings a problem to his or her agent before anyone else, and the agent sees the dispute as it starts to form. Patrick describes real estate agents and brokers as referral partners for that reason, and as the professionals most likely to have seen ten times as many transactions as the investor they represent.

Emotion drives many real estate disputes (14:01). People become attached to a home, to a property, or to an expected outcome. Once a disagreement becomes personal, a party may make an emotional decision rather than an economic one. Patrick compares a transaction that falls apart to a divorce, with each side entrenched in a position.

Many Arizona transactions close without an attorney (15:24). Arizona is a business friendly state, and many buyers and sellers who move here from states where an attorney handles every closing are surprised to find that the agent or broker carries the transaction. Patrick's view is that a solid agent or broker is important in every transaction, commercial or residential, for that reason.

AI can organize, but it cannot judge (17:44). Patrick uses AI tools in his own practice to organize documents, and he describes himself as an advocate of the technology. He also describes the limits. A person who does not know what to ask cannot describe the legal problem to the tool. The tool tends to answer the question asked, in a way that satisfies the asker, rather than identifying the risks the asker did not know to raise. AI output can be thorough and still lack context and judgment. He describes a client who relied on an AI summary of an Arizona landlord tenant statute that did not read the way the tool described it.

Resolving a dispute early can be the better economic decision (30:02). Litigation can take two and a half years or longer, and the uncertainty weighs on people in a way that is hard to appreciate before it happens. Many real estate contracts carry an attorney fee provision under which the prevailing party may recover its fees and costs, which adds to the exposure. Patrick's practice is to lay out the economic and personal cost of each path, litigate when the client chooses that path, and resolve the dispute early where that is the better outcome.

Patrick can address how any of these points applies to your transaction or dispute after a review of the relevant documentation.

Questions the Episode Raises

Does Arizona require an attorney in a real estate transaction?

No. The Arizona Constitution gives a licensed real estate broker or salesperson, acting for a party to a sale or lease, the right to draft or complete the instruments incident to the transaction, including purchase agreements, leases, and deeds. Ariz. Const. art. XXVI, § 1. Many residential and commercial transactions in Arizona close without an attorney involved. That is one reason the choice of agent or broker matters. An attorney review can add value when the terms change during the transaction, when the parties are documenting an unusual arrangement, or when a dispute has begun. Patrick reviews contracts, amendments, and addendums at any of those points.

Can I rely on an AI tool to tell me what an Arizona statute requires?

Not without checking it. AI tools can summarize a statute in a way that sounds authoritative and is wrong, and they can describe a remedy the statute does not provide. The episode describes a tenant who relied on an AI reading of the Arizona Residential Landlord and Tenant Act and believed it allowed a termination of the lease that the statute did not support. Arizona statutes are public and free to read at azleg.gov. Before acting on anything an AI tool states about Arizona law, read the statute, and consult Patrick before any oral or written communication to the other party.

What should I do when a real estate deal starts to fall apart?

Preserve everything. Keep the contract, every amendment and addendum, and every text, email, and message exchanged with the other party and the agents. Do not send the other side a position before an attorney has reviewed the documents, because a message written in the heat of the moment can become evidence. Many disputes can be resolved at this stage, before anyone files anything, and the cost of an early review is small against the cost of litigation. Patrick will review the documentation and lay out the options.

Can I recover my attorney fees if a real estate dispute goes to court?

In some cases. Many Arizona real estate contracts contain a provision under which the prevailing party may recover reasonable attorney fees and costs. Separately, A.R.S. § 12-341.01(A) provides that in any contested action arising out of a contract, express or implied, the court may award the successful party reasonable attorney fees. The award is discretionary, and the same provisions expose a party who does not prevail to the other side's fees. That exposure is one of the elements Patrick weighs with a client before a dispute escalates.

Why does Patrick recommend resolving some disputes early, even at a short term loss?

Because the long term cost of protracted litigation, in money, in time, and in the uncertainty that weighs on a person for years, may exceed the value of the position being defended. Where that is true, a short term economic loss can be the better decision. Where it is not, Patrick litigates. The decision belongs to the client, after a review of the risks and the likely cost of each path.

Transcript

Lightly edited for readability. Filler words and false starts removed. Speaker names restored from the audio. Timestamps are approximate.

Tim Fergestad (0:14): Hello, this is Tim Fergestad. Thank you for joining us. My guest today is Patrick Nackley, founder of Nackley Law and an Arizona real estate attorney with more than two decades of experience spanning litigation, a lot of which is pre litigation, trying to deal with problems before they grow into bigger ones, corporate counsel, real estate transactions, and business risk. Patrick helps property owners, investors, and business owners navigate complex deals and disputes, hopefully before problems become very expensive. Patrick, welcome to the show.

Patrick Nackley (0:56): Thank you for having me, Tim.

Tim (0:59): Why don't you give us a snapshot of Nackley Law and what brought it about? You have been working in the space for a long time, and you wanted to start up your own shop.

Patrick (1:12): I have been in real estate in some capacity for 20 years. I have worked for companies as in-house counsel. Now I am in private practice, and I wanted to start my own law firm. I have that entrepreneurial spirit, as do you. That is one of the reasons I was attracted to the podcast. I also wanted to provide an option for Arizona residents and Arizona business owners who are involved in these disputes, an outlet where we can see if we cannot get the dispute resolved. If they have to go into litigation, I wanted to provide a litigation option that is perhaps not as expensive as some of the white shoe law firms in Phoenix and across Arizona. That is not to say those firms are not great options. But for many small business owners and private homeowners, the price point is a bit exorbitant.

Tim (2:22): You wanted to do that. I imagine you also get a little more control over the type of law and the type of people you work with, and you get to fill the needs where you see fit.

Patrick (2:37): That is correct. Being an entrepreneur, one of the hardest things you face when you start is that you want to attract as much business as possible, and you feel like you need to take everything. In the law in particular, when you are working with a client in a litigation situation, it becomes like a partnership. Even though you are billing and getting paid by the billable hour, you have to rely on the party you are representing. They are getting you documents. They are putting together a narrative that you are trying to convey to an opposing party, an opposing attorney, a judge, or a jury. It becomes a partnership, so you want to pick your partners wisely. One of the things I wanted was my own law firm where I could pick those partners wisely and do the work I am passionate about. The saying is that if you do something you love, you never work a day in your life. I cannot say I love the law so much that it is not work. But it is a lot easier when you are passionate about your client's position, and it helps in your advocacy.

Tim (4:16): Control over one's life and work is a big part of that, in the sense of controlling what you do at work, who you work with, and who you work for. Even for me as an investor, there are people with big money who have wanted to work with me, and I have turned them down because we were not a good fit. I have become much more selective about how I want to spend my time and with whom.

Patrick (4:53): It is a great point. That is not to say that people who have a lot of money are a bad client. You have to respect that people who have built that kind of wealth can be demanding, and rightfully so. But depending on the nature of the relationship, what you want is a partner. I do not mind a partner who is demanding. But particularly when it comes to the law and legal advice, can you be counseled? Are they open to learning and to different ideas? I often had conversations with clients, and I had conversations when I was in-house counsel, where I was passionate about a position I had taken and the client or the company decided to go in a different direction. What I could respect in those situations is that I knew I had been listened to. I knew the risks I had considered and articulated were part of the decision making process. If you are an advisor, that is often the best you can do. That is not to say I would ever condone or work with someone who was going to do something unethical or illegal. But if you are an investment advisor, you know that certain risks may manifest and there are losses associated with them. You have to say, here is the likelihood of the risk and here is the potential loss. If someone is more risk tolerant and says, I hear you, I understand, we are going to do this anyway, that is their decision.

Tim (6:51): Some people do not hear it. No amount of paperwork that they sign means they fully understood it, and that can be a problem. You remind me of one of my friends. I was talking about the risk on a particular investment, and he said, Tim, I would not be talking to you from my yacht if I did not have some appetite for risk. He understood it.

Patrick (7:19): That is right. People who have built that kind of wealth have often had to take risks. You want to say calculated risks, but sometimes they have taken risks absent all of those calculations. If you get involved with someone who you believe is going to continue to take risks absent the calculations, that might not be the ideal partner.

Tim (7:51): Patrick, you spent a couple of decades looking at real estate from both the courtroom and the business side. What do sophisticated investors still consistently underestimate when they enter a deal?

Patrick (8:07): There are a number of things. First and foremost, deals are often time sensitive, and I get that. I want to honor that with respect to people, particularly investors, who have successfully navigated real estate transactions. But the contract still matters. The terms of that contract still matter. On my side, because I am not as involved in the transactional work as I am on the pre litigation and litigation side, I see that this time is of the essence approach creates sloppy paperwork. That can mean a number of things. More often than not, when terms change in some of these more complex deals, you do not see the memorialization in the paperwork that you should see to reflect all of those terms and the nature of the agreement. You often have brokers who are working quickly on amendments or addendums to these contracts, and you see the language that was used. I can put that in front of you and nine other people, and I am going to get eleven different opinions on what it means. I always stress that many successful investors have gone through a number of transactions, and if I audited those transactions, I would tell them the paperwork was a mess. They were fortunate the deal came together. The financing came together, the timing came together, and the buyer and the seller were amenable to orally working through these disputes.

Tim (10:21): Those are ticking time bombs. I have been in a few of those. One comes to mind where our lender, on the day of closing, changed their policy. They were a big group back east, and they said they were not doing deals under 30 million anymore. We had all the paperwork, everything was ready to close, and they said, sorry, we changed our mind. There is generally no recourse in that situation with a big primary lender. But both parties were still amenable to doing the transaction, so they gave us a little more time, we found a new lender, and the terms were still good. If they had not been, we had hard earnest money at stake. Those things matter, and there are big digits involved. Do you have preferred transactional partners you work with, or is it that the people with their paperwork in order do not need as much help? Would you put sloppy paperwork on the attorneys, on the investors, or both?

Patrick (11:45): With respect to referral partners, real estate agents and brokers are excellent partners, because they are often the first person a buyer or seller goes to with a problem. They are an advocate for the transaction, and they see the problem as it starts to manifest. With respect to the transactional paperwork, I have seen deals where the paperwork was terrible, and the parties were amenable to working through the problem despite the bad paperwork, and the deal was salvaged. I have also seen paperwork that was excellent, but you get people who are entrenched in positions and they are going to fight no matter what. So good or bad paperwork does not by itself determine whether a matter ends up in litigation. A transactional attorney is never going to say, I made a mistake, or I left out a term, or this was not clear. But I may look at a deal that is starting to fall apart and think there were things that could have been expressed more clearly, or terms that could have been included, that potentially could have avoided a problem. Hindsight is always 20/20. Being in the litigation space, I think you see more often than not that some deals are going to fall apart no matter how solid the language was or how that language shifted the risk. Some parties say, I do not care what it states, this is what I thought was going to happen or should have happened, and because it did not, now we are in a dispute.

Tim (14:01): How often does emotion dictate how far these things get into litigation?

Patrick (14:09): 9,900 times out of 10,000. People get emotional. This is one reason the real estate industry in Arizona is so attractive. Arizona is growing. Phoenix is growing. There are beautiful areas and beautiful properties available here, and people are emotionally attached, particularly to a single family dwelling, to a home. But even outside of that, people get attached to a real estate deal. When people take it personally, and someone comes back and states, based on the contract, XYZ, you would think that because it is a transaction, and because you are dealing with the language in a contract, people would take a pragmatic or practical approach. They do not.

Tim (15:15): That is why we have brokers and agents, to smooth out the deal and keep the parties from communicating all that emotional baggage.

Patrick (15:24): Sometimes the broker or the agent can also get emotionally invested. As a real estate attorney in the State of Arizona, I do not know how far the reach of your podcast is outside the state, but I talk to people all the time who moved from Chicago, or from New York, or from another state or city where attorneys were involved in every real estate transaction. Arizona is a business friendly state. I encourage it, and I think it has spurred the growth here. But when you do not have attorneys involved, there can be a lot of emotion in these transactions, and you need a solid real estate agent and a solid broker. I highly advocate to people, whenever they get into a real estate transaction, commercial or residential, that they have a broker or an agent who knows what they are doing. If they do not, or if their broker or agent has become emotionally invested because of the time and effort they have put in, that creates problems. That is a long way of saying that emotion plays a big factor in what I do. I often tell people that when these transactions start to fall apart, it is like a divorce. People get entrenched in positions, and they may not make the best economic decision. They are making an emotional decision.

Tim (17:13): I imagine you want to get in front of that and pre frame it as quickly as possible. How has AI affected this type of paperwork? Is it allowing investors to get more insight into their own documents beforehand? Have you seen bad paperwork get better than it was historically?

Patrick (17:44): I am an advocate of AI. There is a huge issue with AI in the law, though. Most people do not know what to ask AI when it comes to the law. You do not know what you do not know, so you do not know how to articulate to AI what you need in a given legal circumstance. Then, in the interaction between you and AI, you have to realize that AI is a people pleaser. AI is often trying to give you the answer that will satisfy your inquiry. If you do not know what to ask, or you do not know how to articulate something, you can have major gaps in what AI produces, in any paperwork, but particularly in legal situations. I have seen AI documents that are thorough in a sense, but they are not specific. They lack context and judgment. Those are the elements, particular to real estate deals, that you want covered, because all you are doing is mitigating risk. What happens if this thing occurs? If you are not familiar with real estate deals, and this is again why agents and brokers can be so valuable, think about it. Even a sophisticated real estate investor is limited to their own experience. A sophisticated broker may have seen ten times the number of deals you have seen. That broker is going to have a skill set that allows them to say, under these circumstances, here are the risks we need to address. How are you going to have AI do that if you do not even know what those risks are? You are assuming AI is going to encompass everything that could go wrong, but AI is generally going to address the specific question you ask in a way that tries to please you. I think AI has the potential one day, and I do not know how far off that day is, to turn out these documents faster than any human being could, addressing all of the deal points. But you have to be able to articulate all of the points of the deal, and you have to have a model that knows as much as the sophisticated brokers and agents do, and that tells you the things you may not see because you do not know enough to ask.

Tim (21:20): Generally speaking, are clients using AI to better educate themselves on the issue? Are they making things better or worse?

Patrick (21:35): I think they are making it worse. I will be frank.

Tim (21:40): My wife is a physician, and people come in having searched WebMD with preconceived notions of what is what, and she has to battle against even more confusing notes.

Patrick (21:58): I will give you an easy example from my professional life. I use Claude. Claude is a limited tool for me. I do not use it professionally that much, but I am starting to use it more, because it does a good job at one of the most difficult parts of the law, which is organizing documents. You have to be careful as an attorney as to what documents you are putting into an AI model. And it states right there at the bottom, where everyone can read it, that Claude can make mistakes. If I ask Claude to organize documents and give me a summary of documents I am going to disclose, none of which is privileged, it can provide a summary that is inaccurate on some of the detail. For me, it is still a great tool. I can go in and say, here is where I think it misunderstood the context, or it missed this line of text, or it hallucinated a line of text that is not there.

That leads me to a professional example, which I will describe only generally. A client had gone to AI with a landlord tenant problem and came to me believing that a statute in the Landlord Tenant Act allowed the client to end the lease. The statute did not read the way AI described it, and what the client thought the statute stated, based on asking AI, was not what the statute stated. I showed the client where the hallucination came in and what we could do instead.

Tim (26:07): That is a great example. The law is, by design, not black and white. As a scientist, that is how I want it to be, and it is not. It depends on how you interpret it, it is written in different ways, and sometimes it is vague on purpose. Then you add somebody who does not have the training or the context, and AI can take you into the weeds.

Patrick (26:39): One comment I want to make about AI, and I think this is a lesson for all of us, whatever the context. Too often we ask AI something, it gives us a result, and we think that is the truth. We think AI cannot make mistakes. This conversation is a good lesson for me personally. No matter what I put into AI and what it tells me, I have to go out and confirm the accuracy of that information. What is interesting is how often AI will cite to things we can check. If it is citing a statute, you can go read the statute. You can ask AI to open a web page and take you to the statute, which is publicly available and not behind a paywall. How often do we do that? I am not accusing anyone of anything, because I engage in this conduct as much as anyone. I put something into AI, it tells me something, and I do not do a deeper dive or seek any further clarification of what it just told me.

Tim (28:07): A lot of people who like to argue with AI can tell you that it will say, whoops, you are right, I was wrong, and change its mind. Then you can talk to it some more and get it to change its mind back.

Patrick (28:23): There was a quote, and I may misstate it, so if anyone watching wants to correct me in the comments, please do. It was from an IBM memo in the late 1970s, and it stated that we are not going to allow computers to make decisions, because computers cannot be held accountable. If you have a large language model that at the end of the day says, oops, how are you going to hold it accountable? That mistake, particularly if you are not having the outcome AI gives you reviewed by a professional, whether a medical professional, a legal professional, or a financial professional, could cost you.

Tim (29:24): That is a great one. Somebody told me to think of AI as more like a sous chef. Trust, but verify. You can assign it tasks, but you still check it before it goes out the door. Patrick, as we wrap up, what are you most excited about for Nackley Law?

Patrick (30:02): I am excited to expand my network, meet new people, and help people in the Valley. I am passionate about resolving disputes before they become litigation or an escalated matter in any way. In my experience, and with the book of business I have, what I find is that even where people take a short term economic loss, it may be a better decision for them than the long term detriment of being involved in protracted litigation. The uncertainty of it weighs on people. If you have never been in a civil litigation matter, you do not recognize how much that uncertainty can weigh on you day to day. That is what I try to articulate to prospects and clients. I am a passionate advocate, so if we have to litigate, we litigate, and if that is the direction you want to go, that is what we do. But I am also passionate about educating my clients as to what their mental health is going to look like if the matter escalates and takes two and a half years, or longer, to resolve. What is the economic impact of that? What kind of risk are you tolerant of if you invest all of this money, are not successful, and potentially face an attorney fee or cost award at the end because the other party prevailed? Under many contracts there are attorney fee provisions under which the prevailing party may recover attorney fees and costs. I am excited about growing, serving more clients in the Valley and in the State of Arizona, and hopefully helping people resolve some of these disputes, and maybe come away with a better opinion of at least one attorney, without having gone through protracted litigation.

Tim (32:37): You are solving problems, and that helps a lot of people. Patrick, if people would like to connect with you and learn more about Nackley Law, where can they go?

Patrick (32:51): The website is nackleylawaz.com. I would like to say I have a flourishing social media presence. I do not. I just started an Instagram account, and it has zero posts on it. I can say with confidence that if you see posts on my Instagram account, someone has been paid to post them professionally. I am not very good with social media, but I know I need to incorporate that element. Right now you can find me on the web at nackleylawaz.com. I have a blog on that web page, and you can find me on LinkedIn.

Tim (33:36): Excellent. Thank you, everyone, for listening and watching, and thank you very much, Patrick Nackley, for joining me today and sharing your insights into real estate law here in Arizona.

Patrick (33:46): Thank you so much, Tim. I appreciate it.

Talk to Patrick

Nackley Law PLLC represents property owners, investors, business owners, and real estate professionals in disputes across Arizona. If a transaction is starting to go wrong, or a dispute has begun, Patrick will review the documentation and discuss the options with you. Consult a licensed professional before oral or written communications with the other party.