FACTS:                    

The buyer and seller executed an Arizona REALTORS® Residential Resale Purchase Contract (the “Contract.”).  While escrow was pending, the buyer provided notice to the seller that he was assigning the contract.  The buyer’s status as a wholesaler was not disclosed in any of the transaction documents. The seller, unhappy with the assignment, wants to cancel the Contract.

ISSUE:                      

May the seller cancel the Contract?

ANSWER:                

Yes.

DISCUSSION:         

Effective September 24, 2022, A.R.S. § 44-5101 (A) requires, before the parties enter into a binding agreement, that a “wholesale buyer of residential real property shall disclose in writing to the seller that the buyer is a wholesale buyer.”  Failure to make the required disclosure entitles the seller to cancel, regardless of any terms to the contrary in the Contract.  A.R.S. § 44-5101(C).  Here, because the required disclosure was not made in writing before the Contract was entered into, the seller may cancel the Contract.