Inspection Contingency - according to the AZ Association of Realtors

December 3, 2008

During the Phoenix AZ real estate boom of 2001-2005 that saw greater Phoenix AZ real estate prices soar more than 100% in most areas, buyers took advantage of the AZ Association of Realtors purchase contract that is designed to be fair, but buyer friendly.Inspection Contingency - according to the AZ Association of Realtors

The reality of the contracts is that you can make an offer and if accepted in writing you have a legally binding contract. In fact, you do not even need to deposit earnest money. The promise to deposit earnest money with an escrow company or brokerage is enough. I should qualify this by saying the seller must send a cure notice for the potential breach of the missing deposit. That gives the buyer 3 days to cure the breach by depositing money.

Ultimately,  that gives the buyer quite a few days, more than 3 for sure,  to ‘contol’ the real estate before deciding whether to go forward. Ethical?? No!! Legal Yes!

Further, the buyer has a standard (this can be amended) 10-day inspection period to ‘kick the tires’ and ,  in all reality can cancel the purchase contract it the buyer’s sole discretion with a full refund of earnest money.  Although, this is not a ‘Free Look’ per a a legal interpretation. Let’s call it what it really is, a ‘free look’. They buyer has 10 days to make purchase decision while having complete legal control and binding contract on the subject property.

The discussion about ‘reasons for cancellation’ are always in dispute;   Do you need a reason to cancel?

According to Michelle Lind, General Counsel of the Arizona Association of Realtors (AAR), the answer is “YES”!

Ms. Lind writes , ” Although the buyer is entitles to cancel in the buyer’s sole discretion, the buyer must  “deliver to seller noticed of the items disapproved and state in the notice that “the buyer elects to cancel (section 6j)…. (continued) ….. If the buyer fails to state the reason for cancellation, the seller should deliver a ‘cure period notice’ to the buyer requesting the reason. If the buyer does not state the reason fore cancellation before expiration of the cure period, the buyer will be in breach of contract, Note: “Contract” refers only to the 2005 Arizona Association of REALTORS (AAR) Residential Resale Real Estate Purchase Contract.

I hope this explanation is helpful to buyers and sellers of real estate in the greater Phoenix real estate market.  Make sure you and your real estate agent are knowledgeable and aware of  your rights and protections

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Copyright © James Wexler *Inspection Contingency - according to the AZ Association of Realtors*

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Written by James Wexler · Filed Under Articles, Buyers 

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