When the new Arizona Association of REALTORS contract was issued back in May 2005, the most significant change was the introduction of cure periods and cure notices.
In short, the cure period prevents either buyers or sellers from unilaterally canceling a contract at the first sign of trouble. If something that is supposed to be done isn’t done by one party, the other party generally cannot cancel and instead has to issue a cure notice.
Here are a few of the situations where you may see a cure notice issued:
- Earnest deposit not deposited in timely fashion
- Repairs not completed within the designated time frame
- Loan docs not signed three full days prior to COE (close of escrow)
- Unable to close on the agreed upon COE date
- Failure to issue a Sellers Property Disclosure Statement or Insurance History report
- Utilities not on for inspections or walkthroughs
Once upon a time, any of these could be cause for immediate cancellation. Though the changes had been in the works long before the 2005 hysteria, the release of the contract could not have come at a better time as it prevented sellers from canceling at the slightest excuse in order to sell to someone bidding higher later.
Under the 2005 contract, the offended party would have to issue a cure notice giving the offending party three days to correct whatever wasn’t done. Only then can the offender be considered in breach and the contract canceled. Also, the three-day clock doesn’t start until the notice is issued; if a sale doesn’t close on time and the seller waits a week to issue the cure, the buyer has three days from the issuance to close – it’s not retroactive.
It’s been said that lenders as sellers don’t much care about the niceties of the contract, including cure notices, but I haven’t seen that first hand. Still, it’s important to take note of the provisions of the lenders’ addenda to see what changes to the AAR contract they are trying to slide past an unsuspecting buyer.
[tags]Phoenix real estate[/tags]