Updated October 2021

ISSUE:

The buyer is purchasing a home in a community that has a homeowner’s association. The HOA Addendum is attached to the contract. After the inspection period expires, the buyer receives the HOA documents from the HOA. These HOA documents include bad financial statements and two pending lawsuits against the HOA. The buyer wants to cancel the contract because of these HOA documents. The seller contends that, inasmuch as the inspection period has expired, the buyer no longer has a right to cancel the contract. Can the buyer cancel the contract and get the return of the earnest money?

ANSWER:

Yes. Under lines 41-42 of the HOA Addendum, the buyer has five days to cancel the contract after receiving the HOA documents. Similarly, under Section 3c of the contract relating to the title commitment, the buyer has five days to cancel the contract after receipt of the title commitment, even if the inspection period has expired. The reason for these longer time periods is that, although the buyer has control over such inspections as home inspections and termite inspections that can be done during the inspection period, the buyer cannot control the time of the delivery of such documents as the HOA documents and the title commitment.

Arizona REALTOR® May 2010