Thursday, September 22, 2005

Entering The "Cure Period"

Back when I listed this property, my agent told me Arizona Realtors have a new sales contract they use and it is very pro-buyer. Yesterday, I ran into one of those pro-buyer clauses.

At the end of the day, I still had not heard back from my agent or the escrow officer, so I called the escrow officer and spoke with her. She had still not received any loan docs. I told her as far as I was concerned, the buyer was now in breach of contract and has lost his earnest money deposit. She told me that I needed to submit a Cure Period Notice. I had no idea what this was, so I called my agent to find out.

Now, keep in mind the contract addendum I signed extended the close of escrow date to Sep. 20th. It was now Sep. 21st and escrow was still not closed. It seems to me this is a pretty clear case of breach of contract.

Unfortunately, this new pro-buyer contract has a provision that, should either party not meet the terms of the contract, they must give the other party an opportunity to "cure" or correct any problems. This is known as the Cure Period Notice. The cure period lasts 3 days. Had I know this, I would not have agreed to extend the close of escrow date and instead would have just started the cure period. After all, they wanted a two day extension and the cure period is 3 days. But I didn't know that and now the buyer has until Monday to get his loan issues straightened out. If it doesn't happen, the house goes back on the market and I get his $2,000 earnest money deposit. At least, I hope I do.

Another pro-buyer provision in the contract is that a failure to secure a loan is not considered non-compliance with the contract and so the earnest money is refundable. Fortunately, we also specified that the earnest money was non-refundable after the inspection period ended. My agent assures me that this will override the other part of the contract which says it is refundable, but it's not really something I'm looking forward to testing.

1 comment:

Anonymous said...

How comforting and interesting to be able to find and relate to a similare real estate issue in Arizona. I'm glad that this site and personal experience are here. It helps me sort out a similare situation currently unfolding as to cure notice and coe date. We might be one day off (late) getting loan docs to Title Co. and would a seller want the deal to fall apart over one day? There is no specification as to earnest money going hard in my contract representing the buyer, and since as your article says, the loan process was delayed through no fault of my buyer, he can and should be fully refunded, IF the seller choses to kill the deal. In this market...who would do that? LOL
Elizabeth w/Keller Williams

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