FACTS:                    

The buyer and seller entered into an Arizona REALTOR® Residential Resale Purchase Contract (Contract) for a property with a zero lot line.  The access to the HVAC and the electrical panel is through the neighboring property.  A recorded easement allows the access.  During a property inspection, the owner of the neighboring property over which the easement is located confronted the home inspector with a firearm and advised him to vacate his property immediately.  The home inspector complied.  The buyer now wants to cancel the transaction.  The seller, however, claims that because the “problem” is beyond the property boundaries, the buyer is unable to cancel because he has not identified a defect with the property itself.

ISSUE:                      

Is the buyer entitled to cancel the transaction?

ANSWER:                

Yes.

DISCUSSION:         

The Contract gives the buyer the ability to inspect the property itself and the “surrounding area” during the inspection.  Here, the reason for the cancellation involves the surrounding area.  Therefore, the buyer is entitled to cancel the contract and receive the return of his earnest money.