If you are purchasing your Arizona real estate through a licensed Realtor ®, they are required to use the Arizona Association of Realtors ® (AAR) pre-printed contract forms. The following applies to the AAR residential resale purchase contract, the most commonly used contract in Arizona real estate sales.
The language of the contract in general, is in favor of the buyer and gives the buyer every opportunity to correct potential breaches. I use the term “potential breaches” because they are just that. In almost all situations, an Arizona real estate buyer can expect to get there earnest money back if they follow a few simple rules.
You can read complete copies of the Arizona Association of Realtors® Purchase contract by downloading a sample copy from the right side of your screen.
GOOD FAITH- You must act in an honest and forthright manner with the seller at all times. If you make an offer to purchase, you must be prepared to consummate the transaction. If you know there is the potential that you may be unable to close, for any reason, you must provide the seller with this information up front. A contract is basically a set of signed promises. Be prepared to deliver what you promise.
TIME IS OF THE ESSENCE- In other words, don’t dilly-dally. You and the seller are at the top of an information pyramid and there are literally 75-100 people who need that information from you to do their job and push the transaction through in a timely manner. The 3 days you sit on that paperwork, may well be the reason your transaction closes 5 days late!!!
GET IT IN WRITING- The contract and its terms and conditions CANNOT be changed by verbal discussions. It MUST be in writing.
EARNEST MONEY- Be aware that your earnest money may be in jeopardy if you do not follow the time frames and requirements of the contract. When you enter into an escrow, you give the Title Company the sole discretion in settling disputes regarding earnest money. Be prepared to lose it if you are not in compliance with the contracts terms and conditions.
CLOSE OF ESCROW- Consider this date as set in stone. If you are not prepared to close by the date you promised, be prepared to lose your earnest money.
FIXTURES AND PERSONAL PROPERTY- In the simplest manner of speaking, if it is nailed down, screwed-in, or planted in the ground, you are entitled to it at close of escrow.
GET PREQUALIFIED– Not only does it GREATLY improve your bargaining position, the contract now requires a loan status report to be attached to any offer subject to financing.
APPROVAL- You must be approved without conditions by the close of escrow date or deliver notice of the inability to obtain financing no later than the close of escrow (COE) date in order to receive a refund of your earnest money.
CLOSING FUNDS– If you are putting some cash down on the purchase, you must have these funds available no later than COE.
APPRAISAL CONTINGENCY- If the real estate you are purchasing fails to appraise for the purchase price, you must notify the seller in writing within 5 days and cancel the contract or it is assumed you are proceeding with the transaction and making up the difference with additional cash. If you cancel for this reason outside of this 5 day period, you will not receive a refund of your earnest money.
LOAN STATUS REPORT- This form must be presented with the contract. It spells out the terms and conditions of the loan you will apply for. If you qualify for the loan provided as written, you are obligated to purchase the home. Be careful when filling out the terms and be sure that you are willing to accept ALL the financial burden they will impose BEFORE you enter into a contract. “Borrowers remorse” will not entitle you to a refund of your earnest money.
COMPLETED APPLICATION- Your loan application and all info that your lender requires must be provided to the lender within 5 days of the contracts acceptance and you must also pay all required lender fees within this 5 day period.
LOAN DOCUMENTS- Your loan documents must be signed no later than 3 days prior to close of escrow. It is your responsibility to ensure they get there by that date. Chose your lender wisely, because if the loan documents do not arrive in sufficient time to close by the COE date, you may lose your earnest money, and the house of your dreams.
CHANGES- You must notify the seller immediately of any and all changes in loan terms and furthermore, may not change the terms if they affect the sellers side of the transaction or delay COE unless you have their permission.
TITLE REPORT- Often overlooked, yet much more important than a home inspection, the title report contains the information that affects the land that your house is sitting upon. You have 5 days to review and inspect it, once received. Though it’s a daunting task, carefully review all of these documents. Bad roofs can be easily replaced, and repaired…..recorded rules and regulations cannot. Be aware of the importance of these documents and how they effect your future use of your property!!
SPDS/INSURANCE CLAIMS HISTORY/AFFIDAVIT OF DISCLOSURE/CHANGES DURING ESCROW/LEAD BASED PAINT-Regardless of when you receive these documents, you will generally have five days after their receipt to review and approve of their content or, cancel the contract and receive a return of all earnest money.
SELLER WARRANTIES- Unless your sale is “as is” (and this is in writing), you are entitled to have all heating, cooling, mechanical, plumbing, electrical and built-in appliances in working condition and that the seller will remove all personal property and debris from the property.
INSPECTIONS- you will be given a specific period of time to perform any and all inspections regarding the subject property and confirm all information contained in the listing. If the information you find is unacceptable, you may cancel and get a refund of your earnest money. HOWEVER, you must cancel within the given time period and you only have one opportunity to cancel or ask the seller to make repairs. The seller is required to have all utilities on and available for you to inspect all the homes systems.
SWIMMING POOL BARRIER REGULATIONS- If the real estate you purchase has a pool, certain regulations apply as to fencing, latches, etc. and you agree to and pay all costs of compliance.
FINAL WALKTHROUGH- You have a right to review the property once more, shortly before close to make sure the property is in substantially the same condition as when you wrote your offer.
CURE PERIOD- If the buyer misses a contractually obligated date or other requirement, the seller will deliver a cure period notice. If the buyer does not correct the potential breach named in this cure period within the standard 3 day time period, the buyer is then in breach and can lose their earnest money. Again, time is of the essence!
ALTERNATIVE DISPUTE RESOLUTION- If there is a dispute between buyer and seller, at any time, they must go to mediation prior to going to court. And prior to that, you must issue the seller a cure period notice, EVEN IF IT IS AFTER THE CLOSE OF ESCROW!
CANCELLATION- If you decide to cancel your transaction, you must do so by providing notice to the title company in writing. A phone call is not sufficient.