Fresh from the pages of Trulia Voices, where California law always seems to be the solution to Arizona legal questions …

“I just recently cancelled escrow, the seller won’t release my earnest deposit. Under what terms are they allowed to keep the deposit?”

Seven answers in, one from Arizona. Apparently our real estate laws are more popular across the country than I ever imagined. My favorite response gets the basic answer right for all the wrong reasons, courtesy of an agent in Carlsbad:

Being that, the terms of your contract are vague, at that. It would be wise of you to consult with an real estate attorney.

Contacting a real estate attorney clearly is the right answer … but it has nothing to do with the contract being vague. In fact, if the Arizona Association of REALTORS’ standard Residential Resale Purchase Contract was used, determining who gets the earnest deposit when there’s a cancellation is usually (usually being the operative word) straight-forward.

(Standard disclaimer: I’m a real estate agent not an attorney. For best results, don’t look for the free advice and get an attorney. Mileage may vary. Use only as directed.)

As a general rule the buyer is able to cancel the contract for a handful of different reasons and retain their earnest deposit:

• At buyers’ sole discretion during the (generally) 10-day inspection period.
• If the buyer requests repairs but the seller refuses to make all requested repairs.
• If after a good faith effort buyer is unable to qualify for a loan.
• If after a good faith effort buyer is unable to qualify for a loan without conditions.
• If the home doesn’t appraise for the negotiated sales price.
• If for some reason there is damage to the home greater than 10% of the purchase price whether by weather, act of God, etc.

There are a couple of others involving cure periods but we’ll let those go for now.

As long as the buyer cancels during the proper time period for one of the above reasons, the escrow company ought to return their earnest deposit.

This is assuming an escrow company is being used. Since this question was off Trulia there is an excellent possibility this was a purchase and/or sale involving an unrepresented buyer and/or seller who may or may not have know they ought to have used an escrow company to hold the earnest deposit and make sure the sale is executed properly.

As Jay rightly pointed out in his response, it’s up to the escrow company to determine what happens to the earnest deposit. AAR’s standard contract even says so. Of course, if you elect to move forward without representation and without that contract … using, for instance, one of those two-page fill in the blanks from Office Max that have no real basis in Arizona law, then you may have a problem on your hands

(Apparently there’s some justice on Trulia Voices … the lone local voice received the only almost coveted “thumbs up” for his answer. Good to see.)

Technorati Tags: real estate negotiations, Phoenix real estate, Trulia Voices

Popularity: 10% [?]

Share This

Tags: Bad MLS/Trulia Remarks, Tips for Sellers, Tips for Buyers by Jonathan Dalton
6 Comments »

Popularity: 6% [?]

Share This

Tags: Miscellany by Jonathan Dalton
1 Comment »

Phoenix mortgage rates were pretty much unchanged this week, exactly as we expected them to be.

The Chinese said that our dollar was akin to a Latin American country’s currency which gave us a minor scare in the mortgage-backed securities markets. We responded by saying that their toys are more dangerous than lead-based paint chips.

We are at war with China, an economic war but a war nonetheless. It’s a war based on cultural differences, like all wars. This war is not about a land grab it’s about fair access to markets. The Chinese want to sell whatever they can to Americans, with a decided price advantage, without offering access to their markets. Yahoo! was the first American traitor when they aided and abetted the enemy for a few yuan.

What does China have to do with mortgage rates in Arizona?

The answer will soon be “nothing”. We feared the ChiComs because of their ability to hoard US Treasuries- China became the 800 lb gorilla that could dump those bonds and drive our mortgage rates in Phoenix up. They did it and nothing happened.

The underlying theme, driving mortgage rates , is the American economy. Ben Bernanke is trying to balance the threat of higher oil prices with a collapsing real estate finance market. The former is inflationary while the latter is deflationary. Expect him to be biased against an economic depression. This means lower rates in the next 6-18 months. In the short term, a C-note for a barrel of crude oil, is keeping rates around the 6% range.

We think it makes sense to cautiously float your mortgage rate until we see what the numbers look like on Wednesday.

Popularity: 6% [?]

Share This

Tags: Real Estate Financing, Tips for Buyers by Brian Brady
1 Comment »