Arizona Purchase Contract

Arizona Real Estate Purchase Contract – Title/Escrow, Disclosures, and Warranties

This is the second in a series of three blog articles detailing and explaining the Arizona Real Estate Purchase Contract.

I would recommend reading the first blog article first if you haven’t already: Arizona Real Estate Purchase Contract – Property and Financing Section

Sections 3, 4 and 5 of the Purchase Contract deal with Title & Escrow, Disclosures and Warranties, respectively.

Section 3 – Title & Escrow

Lines 89 through 114 specify the Escrow and Title company that the Buyer has elected to use during the Purchase process. Sometimes Escrow and Title are separate companies, in which case there would be two company names and two phone numbers, and other times one company handles both duties.

Section 3f discusses how the earnest money can be released in the event of a dispute between Buyer and Seller. Essentially it indemnifies the escrow company of any liability in case of such event and directs all actions to be dictated by the Purchase Contract.

Sections 3g and 3h explain who will pay for any outstanding assessments or liens against the property and 3i discusses necessary action in case of the Buyer being a foreign resident or non-resident alien.

Section 4 – Disclosures

Section 4a discussed the Seller Property and Disclosure Statement (SPDS) which is commonly referred to as the “SPUDS” by agents. The SPDS is the document where the Seller lists any and all defects/details they are aware of regarding the property. This document must be provided to the Buyer within five (5) days of Contract Acceptance which gives them time to review the document during their inspection period.

Also within five days of Contract Acceptance the Seller must provide a 5-year Insurance Claims History report to the Buyer. Section 4b is has a few purposes. First, to let the Buyer know if there were any claims to the property (fire, vandalism, plumbing issues, etc.). And second, to alert to the Buyer to the possiblity that the home may not be insurable.  If the home is not insurable the Buyer will probably not qualify for most traditional lending programs.

Section 4c deals with Lead-Based Paint Disclosures and what the Seller’s obligations are to the Buyer. The Buyer also has an option to back out of the deal at this point and retain their earnest deposit.

Sections 4d and 4e deal with an Affidavit of Disclosure and the Seller’s responsibility to inform Buyer if there are any changes to the Premises or disclosures during the escrow proces.

Section 5 – Warranties

The warranties section is a particularly important section of the Contract and many deals fall apart at this stage. The Arizona Real Estate Purchase Contract is extremely Buyer-friendly and protects them to the fullest.

Section 5a states which systems, appliances and other equipment is required to be in working condition by COE.  It also specifies that Property must in the “substantially same condition” as on the date of Contract acceptance. Many Sellers think that they are not obligated to have everything in working condition to sell their home, but if this is the case, they should have the Buyer submit an As-Is Addendum that specifically waives their rights to have these warranted items in working order.

Section 5b states that Seller has disclosed all known latent defects to Buyer and that all labor/services/materials/machinery/fixtures/tools utilized in the 150 days prior to COE have been completely paid for. This section is to protect the Buyer against having to pay for items that Seller had not paid for before COE.

Section 5C is where the Buyer asserts that Buyer has disclosed to Seller anything that may affect the Buyer’s ability to close escrow. There is also a write-in section where Buyer can spell-out what verbal representations they are relying on (if any); typically this section is filled out with “NONE“.

Arizona Purchase Contract – Sections 3, 4 & 5 Summary

As you can see these sections of theArizona Purchase Contract are laden with many important details and timelines. Keep in mind that this Purchase Contract is periodically updated by the Arizona Association of Realtors (AAR) and that this article is only as current as when it was written.  Hopefully you come away from this article a better informed consumer!

Stay tuned for part three of the Arizona Real Estate Purchase Contract – Dissected and Explained series:

• Arizona Real Estate Purchase Contract – Dissected and Explained
• Arizona Real Estate Purchase Contract – Title/Escrow, Disclosures, and Warranties
• Arizona Real Estate Purchase Contract – Due Diligence, Remedies, and Seller Acceptance

Arizona Real Estate Purchase Contract – Property and Financing Section

This is the first in a series of three blog articles detailing and explaining the Arizona Real Estate Purchase Contract. Sections 1 and 2 of the Contract deal with the Property Details and Financing of the property so let’s take a look at them.

Section 1 – Property Details

Lines 1 and 2 of the Arizona Purchase Contract (section 1a) specify who the Buying and Selling parties. Section 1B specifies the property address and legal description.

Section 1c is one of the most important sections of the Contract as it contains the Purchase Price, amount of earnest deposit (if any), down payment (if any), and terms of financing (if not a cash deal). This is typically thought of as “the meat” of the Contract.

Section 1d details Close of Escrow (”COE”) which is when title is recorded, keys are handed over and formal ownership of the property is given to the new owner. This is typically called “closing”.

Sections 1e through 1g are self-explanatory but I do want to touch on lines 40-45. If the boxes on line 40 are checked, please make sure that the items are detailed on lines 41-42 (e.g. color, model, serial number), otherwise you may be left with a different refrigerator/washer/dryer than the ones that were present when you made your offer. I know it sounds far-fetched but I have seen Sellers swap out appliances right before COE with older ones. And legally, the Buyer doesn’t have recourse against the Seller for that specific action (realistically though they could hold up closing while it is resolved).

Section 2 – Financing

The financing section of the Arizona Purchase Contract is not very long (38 lines) but it contains loads of valuable information and disclosures.

Section 2a specifies that the Contract is contingent upon Buyer obtaining financing for a loan “without conditions” no later than COE. Basically this means that if the Buyer cannot qualify for a loan then they are able to get out of the Contract. This is typically avoided in the first place by requiring that Buyer’s submit a Loan Status Report (LSR) when they first submit a Purchase Contract for the property. The LSR is a stamp of pre-approval from a lender that tells the Seller that the Buyer is “good to go” to buy the home.

Section 2b is along the same lines as Section 2a and says that if Buyer cannot obtain financing “after diligent and good faith effort” bye COE the Contract shall be canceled and Buyer will be entitled to their earnest deposit.

Section 2c applies to property appraisals. If the property does not appraise for the purchase price set forth in Section 1 the Buyer has five (5) days to either waive this contingency (which happened a lot during the real estate boom) and continue with the purchase or cancel the Contract and receive a refund of their earnest deposit.

Sections 2d through 2f are self-explanatory and pertain to time constraints for notices and documentation to be filed or completed.

Section 2g and 2h specify the type of the loan (if any) the Buyer is planning on using to purchase the property. There are also options to have certain costs paid for by Buyer or Seller (when purchasing property almost everything is negotiable).

For VA and FHA loans there are certain costs that the Buyer is not allowed to pay (by law) and that the seller must pay for. Section 2i details what amount these costs cannot exceed.

Sections 2j and 2k are simply timeline and disclosure notices.

Arizona Purchase Contract – Sections 1 & 2 Summary

As you can see the first two sections of an Arizona Purchase Contract are laden with many important details and timelines. Keep in mind that this Purchase Contract is periodically updated by the Arizona Association of Realtors (AAR) and that this article is only as current as when it was written.  Hopefully you come away from this article a better informed consumer!

Stay tuned for parts two and three of the Arizona Real Estate Purchase Contract – Dissected and Explained series:

• Arizona Real Estate Purchase Contract – Title/Escrow, Disclosures, and Warranties
• Arizona Real Estate Purchase Contract – Due Diligence, Remedies, and Seller Acceptance

Arizona Real Estate Purchase Contract – Dissected and Explained

I am getting more and more hits on my site from people looking for “arizona purchase contract” or “buying agreement arizona” or <insert similar phrase here>. I am going to post an Arizona Purchase Contract .pdf and explain each section so that you, as a Buyer, are more informed about the buying process here in Arizona.

Below is a link to the Contract:

Arizona Purchase Contract

The Arizona Real Estate Purchase Contract is a nine page document and is broken down into nine Sections as listed below:

1. Property
2. Financing
3. Title & Escrow
4. Disclosures
5. Warranties
6. Due Diligence
7. Remedies
8. Seller Acceptance

I will break up the explanations into three different articles to prevent a huge run-on blog article. The first will cover Property and Financing, the second Title/Escrow, Disclosures, and Warranties, and the last will cover Due Diligence, Remedies, and Seller Acceptance.

Arizona Real Estate Purchase Contract – Property and Financing Section
Arizona Real Estate Purchase Contract – Title/Escrow, Disclosures, and Warranties
Arizona Real Estate Purchase Contract – Due Diligence, Remedies, and Seller Acceptance