How many days do I get to back out of a home purchase in Arizona?
Now that is an often misconstrued matter. Many people view the due diligence period (inspection period) as a “free look.” While it is true that a buyer is entitled to a full return of his/her earnest money and freedom from the obligation to continue with the purchase based upon the results of inspection(s) or other material matter (discovery of neighborhood crack house right next door, improper square footage in listing, scary structural or insurance history as reported in the Seller Property Disclosure Statement or insurance loss history report, etc) during the first 10 days of the escrow period, it should not be abused. It’s not really a “free” look anyway if you are shelling out money for inspections. I’ll address the question by examining the buyer protections that are in place regarding the initial inspection period in the standard AAR (Arizona Association of Realtors) purchase contract.
As a protection, the time frame for the inspection period is often slightly misunderstood. The buyer has 10 days from the full execution of the purchase contract (the day it the contract by both parties is executed is considered Day Zero) to provide the seller with notice of his/her intentions. Any time up to 11:59 PM on Day 10, the buyer can elect to (A) move forward with the purchase, (B) decline to move forward based upon a specific objection(s) or (C) agree to move forward provided that the seller make certain repairs. If the buyer chooses option A, he/she is committed to the purchase and the inspection period is over. If option B is selected, the buyer withdraws from the purchase and earnest money is fully refundable (provided the seller doesn’t contest the validity of the buyer’s objection). If option C is selected, the seller has 5 days to respond to the repair demands. If the seller responds in any manner other than full acceptance of buyer demands, the buyer has another 5 days to review upon receipt of seller’s response. The options for the buyer at that point are to either walk away or accept and move forward.
So, like so many things in Real Estate, the answer is that “it depends.” Depending on the choices made by each party, the buyer can actually have up to 20 days to cancel the contract based upon inspection issues. There are other potential walk-aways in the standard purchase contract, such as the financing and appraisal contingencies, that extend beyond the initial inspection period, but those are dependent upon your good faith effort to obtain timely loan approval failing or the property not approving for at least the sales price (in financed transactions), respectively. They aren’t reliable escape clauses to be leveraged if you simply change your mind weeks into the escrow period.
There is also the final walk-through, which provides the buyer with the opportunity to ensure that the property is both in substantially the same condition as it was when they agreed to purchase terms, and that all agreed upon repairs have been competently performed. Again, however, this is not a reliable walk-away at the zero hour. There would have to be some serious material reason for exiting the transaction at this point. A reason that would have to stand up to scrutiny as you can bet your bippy the seller will contest it.
Long story short, there are ways out of a purchase agreement in Arizona if certain contingencies are not met, or the other party breaches the agreement, but you shouldn’t rely on them as safeguards against a change of heart. Your “free look,” if you insist on considering that, effectively ends at midnight of Day 10.
* A note of importance: If the buyer supplies the seller with notice of repair demands prior to Day 10, he/she effectively waives the remaining time left in the initial 10 day inspection period. For example, if the buyer sends repair demands to the seller on Day 5, he/she cannot come back with additional demands on Day 9. And if the seller signs off on the agreement to make all repairs, the buyer is now bound to proceed. *
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Ray and Paul Slaybaugh are not attorneys, just humble Real Estate agents. Please do not be silly enough to rely on any opinions given here for legal advice. Consult with a qualified attorney should you have any legal matter pertaining to a Real Estate transaction that needs to be addressed.