Appraisal Contingency May Begin Again
Posted on July 27, 2016 by AAR
Realtors®, Buyers & Sellers: I find this is VERY important information .. sharing in the off-chance you've missed this ...
A buyer and seller entered into a Residential Resale Real Estate Purchase Contract (the “Contract”). During the escrow process, the buyer received notice from her lender that the property appraised for the contract price. The buyer therefore notified the seller that the property had appraised for the contract price.
However, ten (10) days before close of escrow, the underwriter notified the buyer that the appraisal had been flagged for review. Within three (3) days, the buyer was notified that the appraisal value had been decreased during the review. The buyer now notifies the seller that she cannot qualify and, pursuant to section 2m of the Contract, is electing to cancel based on the appraisal contingency.
Can the buyer cancel based on section 2m of the Contract during an appraisal review?
Section 2m of the contract reads: “Buyer has five (5) days after notice of the appraised value to cancel this Contract and receive a refund of the Earnest Money or the appraisal contingency shall be waived.”
During an appraisal review, the buyer received a new notice of value, therefore, the buyer likely had five (5) days from the notice of the new value to cancel or waive the contingency. If the buyer fails to cancel within five (5) days, then the buyer must proceed with the Contract.
Tags: appraisal, cancel contract, cancellation
**This post has been borrowed from the Legal Hotline link on the Arizona Association of Realtors® website. I do not claim ownership; merely sharing for informational purposes**