There was a rather interesting thread this past week on Trulia Voices, all revolving around the concept of the earnest deposit.
In theory, once a contract is accepted, the buyer (or their agent) opens escrow and deposits a check as the earnest deposit – essentially a good-faith deposit representing the buyers’ intent to purchase the home.
Amazingly enough, though, the AAR Residential Resale Purchase Contract is extremely vague as to when the earnest deposit needs to be deposited into escrow.
Some agents on the thread argued that there’s a 48-hour rule, or that 48 hours is the accepted practice. I can handle that except, when push comes to shove as seems to be happening for this seller, there’s nothing in the contract that says the buyer had to make the deposit within 48 hours.
In fact, there’s no timeframe at all. Guidance from the state real estate department also is vague, saying that the deposit must be made promptly. And on wording like that, attorneys are retiring to the Bahamas.
What was most interesting, at least to me, was the broker wading into the fray:
In Arizona the contract is clear, Earnest money has to be deposited as soon as possible, failure to deposit the money can mean there is no Contract.
As a matter of fact, the contract is so clear in this respect that the phrase “as soon as possible” cannot be found – no timeframe at all is given in any of the paragraphs in which the earnest deposit is referenced. As for the idea that not making the earnest deposit “can mean there is no Contract,” again, there is no wording anywhere in the AAR contract to that effect.
My guess is this broker, who specializes in bank owned homes, is confusing the AAR Purchase Contract with the Fannie Mae addendum that voids the contract if the earnest deposit isn’t made within a set time period. Fortunately for us, the Fannie Mae addendum doesn’t apply to all real estate transactions here in the great State of Arizona and the ability to negotiate rather than be given marching orders by a
data entry drone asset manager still exists.
All of this does make me wonder what will happen when the foreclosures finally disappear and these agents who only know what Fannie Mae tells them are forced to (gasp) re-learn the Arizona contract. It might come as quite a shock to learn that what seems so black and white instead blends into nine pages of gray.