__________ Homeowner's Manual
mindful homeownership
Understanding the Arizona Residential Resale Purchase Contract
This article is for informational purposes only and does not constitute financial, investment, legal or medical advice. Please consult a licensed professional for personalized guidance.
The Arizona Residential Resale Real Estate Purchase Contract, provided by the Arizona Association of REALTORS® (AAR), is a legally binding document that outlines the terms of a home sale. It protects both buyers and sellers, ensuring transparency and setting clear expectations.
Here’s what you need to know, section by section:
1. Property Information
- Property Address & Legal Description: Confirms the exact property being purchased. Double-check the address, parcel number, and legal description for accuracy.
- Fixtures & Personal Property: Specifies items included in the sale (e.g., appliances, window treatments, pool equipment). Review carefully to avoid misunderstandings.
2. Purchase Price & Earnest Money
- Purchase Price: The agreed-upon price for the home.
- Earnest Money Deposit: A good faith deposit showing your serious intent to buy. This is typically held in escrow and credited toward your purchase at closing.
- Down Payment & Loan Amount: Details the amount you’ll pay upfront and how much you’re financing.
3. Financing & Loan Contingency
- Loan Terms: Specifies the type of loan (conventional, FHA, VA, etc.) and the timeframe for securing financing.
- Loan Status Update (LSU): A document your lender provides to update the seller on your loan progress.
- Unfulfilled Loan Contingency: If you can’t get financing within the specified period, you may cancel the contract without penalty (if handled correctly).
4. Title & Escrow
- Title Company & Escrow Agent: The neutral third party handling the transaction, holding funds, and ensuring all conditions are met.
- Title Commitment: A preliminary report outlining any liens, encumbrances, or restrictions on the property. Review carefully to avoid surprises.
5. Seller Disclosures
- Seller Property Disclosure Statement (SPDS): A document where the seller discloses known property issues. Review thoroughly to understand the home’s history and condition.
- Insurance Claims History: Sellers must provide a five-year insurance claims history (or the length of ownership).
- Lead-Based Paint Disclosure: Required for homes built before 1978.
6. Due Diligence & Inspections
- Inspection Period: Typically 10 days to conduct inspections and negotiate repairs.
- Buyer’s Inspection Notice & Seller’s Response (BINSR): A form used to request repairs or accept the property as-is.
- Cancellation Rights: You can cancel the contract if major issues arise, provided it’s within the inspection period.
7. Warranties & Condition of Property
- As-Is Sale: Most Arizona homes are sold as-is, but the buyer can still request repairs during the inspection period.
- Home Warranty: Specifies if a home warranty plan is included, who pays for it, and the coverage amount.
8. Closing Process
- Close of Escrow (COE) Date: The official date the property changes ownership.
- Prorations & Adjustments: Property taxes, HOA fees, and utilities are prorated between buyer and seller.
- Final Walkthrough: A pre-closing inspection to verify the home’s condition and confirm any agreed-upon repairs were completed.
9. Remedies & Dispute Resolution
- Breach of Contract: Explains the consequences if either party fails to meet their obligations.
- Dispute Resolution: Outlines how disputes will be handled, often through mediation or arbitration.
10. Additional Terms & Conditions
- Contingencies: Additional conditions that must be met for the sale to proceed (e.g., sale of the buyer’s current home).
- Addenda & Counteroffers: Any supplemental documents or negotiated changes to the original contract.
Key Deadlines to Track
- Earnest Money Deposit
- Inspection Period
- Loan Approval
- Closing Date
Pro Tips for Buyers
- Work Closely with Your Realtor: They’ll help you navigate each contract section and keep you on track with deadlines.
- Communicate with Your Lender: Ensure your loan application progresses smoothly to avoid delays.
- Don’t Skip the Inspection: Even if the home looks perfect, an inspection can uncover hidden issues.
- Review the Title Report: Make sure there are no unresolved liens or ownership disputes.
- Understand Your Out-of-Pocket Costs: Factor in closing costs, prorated taxes, and potential repair expenses.
Understanding the Arizona Residential Resale Purchase Contract empowers you to make informed decisions and confidently move through the home buying process. With the right guidance, buying a home can be an exciting and rewarding journey!
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