by Phoenix attorney Christopher A. Combs, partner with Combs Law Group, P.C.
Question:
During the Inspection Period, the buyer submits a BINSR [Buyer Inspection Notice and Seller Response] stating that the buyer elects to cancel the Contract due to too high of an anticipated monthly mortgage payment, and due to the failing health of the buyer. Can the buyer cancel the Contract and receive the earnest money back for either of these reasons?
Answer:
Probably not. Line 234 of the Contract provides that the buyer can cancel within the Inspection Period if the buyer “disapproves of items as allowed herein.” This language references Lines 182-194 of the Contract, which specifies the items which the buyer can investigate during the Inspection Period, and upon which the buyer can base any cancellation. All of these items relate to the premises themselves, and not financing or health problems. Therefore, the buyer would probably be in breach of the Contract for attempting to cancel because of these reasons, and would lose the earnest money if the buyer failed to close the transaction.
The above is for informational purposes only and is not intended as definitive legal or tax advice. You should not act upon this information without seeking independent legal counsel. If you desire legal, tax or other professional advice, please contact your attorney, tax advisor or other professional consultant. Reprinted with permission. Copyright 2007, all rights reserved.
2 responses so far ↓
1 joyce // May 17, 2008 at 11:13 am
the purchase contract language that the buyer has the right to check everything that is material to them including checking with lenders. anyway, during the inspection period they had found that the cost to remodel would be greater than they antcipated and their total investment and their monthly payment would be too high, Do they have the right to cancel this contract awithout losing their earnest deposit?
2 John Wake - Real Estate // May 17, 2008 at 1:19 pm
Probably, if it is during the inspection period.
The Arizona Association of Realtor’s contract states about what can be investigated in the Inspection Period on Line 54, “(ii) make inquiries and consult government agencies, lenders, insurance agents, architects, and other appropriate persons and entities concerning the suitability of the Premises and the surrounding area…”
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