Arizona Real Estate Law

by Christopher A. Combs

The following is for informational purposes only and is not intended as definitive legal or tax advice. You should not act upon this information without seeking independent legal counsel. If you desire legal, tax or other professional advice, please contact your attorney, tax advisor or other professional consultant.

Appraisal must be satisfactory to the lender

Question: The appraisal comes in at the sales price. The underwriting department of the lender, however, requests another appraisal, and the second appraisal comes in lower. Can the buyer cancel the transaction and receive the return of the earnest money if the buyer cancels the contract within five days after notice of the second appraisal?

Answer: Yes. Under Lines 59-60 of the Contract, the Contract is contingent upon an appraisal “acceptable to lender for at least the sales price.” The lender never received an acceptable appraisal, and the buyer was entitled to cancel the Contract after notice that the home did not appraise for the sales price under the second appraisal.

Phoenix attorney Christopher A. Combs is a partner with the firm of Combs Law Group, P.C. Reprinted with permission. Copyright 2006, all rights reserved.

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