When you’re buying a home in Arizona, one document stands at the center of the entire transaction: the Residential Resale Real Estate Purchase Contract. This isn’t just any piece of paperwork—it’s the legally binding agreement that will govern every aspect of your home purchase from start to finish.
As a homebuyer, understanding this contract is crucial for protecting your interests and ensuring a smooth transaction. Let’s break down this important document and explain what you need to know before signing on the dotted line.
The Arizona Association of REALTORS® (AAR) Residential Resale Real Estate Purchase Contract is the standard form used for the vast majority of existing home purchases in Arizona. Updated as of August 2024, this 10-page document spells out the rights and obligations of both buyers and sellers.
Think of it as the roadmap for your entire transaction—it establishes the purchase price, sets timelines, outlines contingencies, and creates a framework for resolving any issues that might arise during the process.
The contract begins by identifying the parties involved (buyer and seller) and the property being purchased. This section includes:
What You Need to Know: The earnest money is your “good faith” deposit that shows you’re serious about buying the property. While the amount is negotiable, it typically ranges from 1-3% of the purchase price in Arizona. This money will be deposited with either the escrow company or broker’s trust account and will eventually be applied toward your down payment at closing.
The contract also specifies when you’ll take possession of the property, which is typically at close of escrow (COE) but can be negotiated for earlier or later dates if needed.
This section defines what stays with the home and what doesn’t. It includes:
What You Need to Know: Fixtures are generally anything permanently attached to the property (built-in appliances, ceiling fans, light fixtures, etc.) and are included in the sale unless specifically excluded. If you want certain items that might be considered personal property (refrigerator, washer/dryer, etc.), they need to be specifically listed in this section.
For example, if you notice during a showing that the seller has a beautiful dining room chandelier that you love, don’t assume it comes with the house. If it’s important to you, make sure it’s explicitly listed in this section.
Unless you’re making an all-cash purchase, this section is crucial. It covers:
What You Need to Know: The loan contingency protects you if you’re unable to secure financing despite good faith efforts. If your loan falls through for reasons beyond your control, you can typically recover your earnest money.
The contract requires you to deliver a Loan Status Update (LSU) to the seller within 10 days of contract acceptance and to complete a loan application within three days of acceptance. Missing these deadlines could put you in breach of contract, so mark your calendar!
The appraisal contingency is particularly important in fluctuating markets. If the home appraises for less than the purchase price, you typically have five days to:
This section establishes:
What You Need to Know: The title commitment is a document you’ll receive that shows the current status of the property’s title, including any liens, easements, or other encumbrances. You have five days from receipt to review and object to any items you find unacceptable.
How you take title (sole ownership, joint tenancy with right of survivorship, community property, etc.) has significant legal and tax implications. The contract recommends consulting with an attorney or tax advisor about this decision.
Transparency is crucial in real estate transactions, and this section requires the seller to provide:
What You Need to Know: The SPDS is a comprehensive questionnaire where the seller discloses known issues with the property. Review this document carefully—it provides valuable information about the property’s condition, history, and potential problems.
For example, if the SPDS indicates previous water damage or roof leaks, you’ll want to pay special attention to those areas during your inspection, even if the seller states they’ve been repaired.
This section clarifies what warranties the seller is making about the property:
What You Need to Know: The contract explicitly states that the seller makes no warranty as to the condition, zoning, or fitness for any particular purpose. This is why your inspection period (discussed next) is so important—it’s your opportunity to verify the property’s condition.
Perhaps the most important section for buyers, this covers:
What You Need to Know: The inspection period is your opportunity to conduct all desired inspections and investigations. During this time, you can:
At the end of the inspection period, you have three options:
If you request repairs, the seller has five days to respond. They can agree to all repairs, agree to some repairs, or refuse to make any repairs. If you’re not satisfied with the seller’s response, you have five more days to either accept the property as-is or cancel the contract.
Example Scenario: Let’s say your inspection reveals a roof leak and electrical issues. You submit your Buyer’s Inspection Notice requesting repairs for both items. The seller agrees to fix the roof but declines to address the electrical issues. You must then decide whether to:
This section outlines what happens if either party breaches the contract:
What You Need to Know: If either party fails to comply with the contract terms, the other party can issue a “cure notice” allowing three days to remedy the situation. If the breach isn’t cured, the non-breaching party may cancel the contract and/or pursue other remedies.
If you as the buyer breach the contract (for example, by failing to close on time), the seller may be entitled to keep your earnest money as liquidated damages.
This section allows for the inclusion of any additional terms specific to your transaction.
What You Need to Know: This is where any special agreements or conditions would be documented. For example:
The final sections cover:
What You Need to Know: This section confirms which agent represents the buyer and which represents the seller, or if any dual agency exists. It’s important to understand who’s representing your interests throughout the transaction.
The Arizona Residential Purchase Contract is full of deadlines that can significantly impact your transaction:
Missing these deadlines can have serious consequences, including potential loss of earnest money or even breach of contract.
The Arizona Residential Resale Real Estate Purchase Contract is a comprehensive document designed to protect both buyers and sellers throughout the transaction. While it may seem daunting at first glance, understanding its key provisions empowers you to navigate the home-buying process with confidence.
Remember that the contract is designed to be fair to both parties, establishing clear expectations and procedures for handling various situations that might arise. Working closely with your real estate agent and, when needed, a real estate attorney can help ensure that your interests are protected as you use this contract to purchase your Arizona home.
By familiarizing yourself with this document before making an offer, you’ll be better prepared to negotiate terms, meet deadlines, and ultimately achieve a successful closing on your new home.
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