How To Cancel Buying a Home
In Arizona there are multiple ways that buyers may cancel a purchase contract. These are the main 5 ways to cancel buying a home without needing the seller’s approval and get your earnest money back!
1. After Your Inspection
As a home buyer in Arizona your first opportunity to cancel is after the inspection period. After you have done your inspections and had a good look at the property you can reject the property by delivering the Buyer’s Inspection Notice and Seller’s Response. However, to cancel this way you must specify your findings that caused you to want to cancel out of buying the home.
2. Loan Contingency
If the bank won’t loan you the money pay for the home that you have agreed to purchase you aren’t expected to. The second way a buyer can cancel their home purchase is through loan denial. Loan Denial is after “diligent and good faith effort” you are unable to get loan approval and you let the sellers know 3 days before your Close of Escrow COE. However, loan denial cannot be for the following reasons: inability to get the interest that you wanted or not having the down payment or funds needed to get the loan.
3. Appraisal Contingency
When you are buying a house one of the most important things to the bank is “what is it worth“. In order to figure that out the bank will order an appraisal of the property. An appraisal is an estimate of what a property is worth. In the event that the appraisal (estimate) comes in below the contract price you have the opportunity to cancel buying the home.
4. Title Commitment Review Period
Upon receiving the Title Commitment from the Title Agency you have 5 days to review all the information given to you. During your review period if you find information, such as deed restrictions, that would effect your desire to purchase the house you can cancel.
Say you are a furniture maker looking to buy your perfect home and build a large workshop in the back of the lot. However, when you review the Title Commitment you find that there is an easement in the back of the property right where you’d like to build the shop. This means you cannot build your shop and it negatively affects your desire to buy the property. If you state this reason you can cancel buying the home.
5. Covenants, Conditions, and Restrictions Review Period
The way to cancel a contract during the CC&Rs Review Period is almost identical to the Title Commitment Review Period. The Home Owner’s Association (HOA) will send you the CC&Rs for the house that you are buying. During your review period if you find information that would effect your desire to purchase the house you can cancel.
A good example of this is if you wanted to paint your house purple. It had been your lifetime goal to own and purple house that is finally coming to fruition. Upon review of the CC&Rs you see that they only allow brown, tan, and light brown. Now you have the opportunity to cast your dreams of purple house away or you can cancel buying the home.
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