FACTS: At the walkthrough, the buyer discovers that the seller has not repaired a window as agreed upon in the Arizona REATORS® Residential Buyer’s Inspection Notice and Seller’s Response (BINSR) form.  The cost of the window repair is approximately $500.  The purchase price of the property is $750,000.  The buyer wants to cancel the contract due to the seller’s failure to repair the window.   

ISSUE: Is the buyer entitled to cancel the contract due to the seller’s failure to repair the window as agreed? 

ANSWER: See Discussion. 

DISCUSSION:

Although there is a remedy for every breach of contract, the remedy is not always cancellation. The buyer should deliver a cure notice to the seller.  The buyer may then delay closing for up to three (3) days to allow the seller the opportunity to repair the item.  In the alternative, the buyer may close escrow and if the seller fails to make the repair within three days, pursue the seller for the breach and recover the cost of the repair (in small-claims court, mediation, arbitration or litigation). If the buyer delays COE for the three-day cure period and the seller still has not completed the repair, the seller is in breach of contract.  Section 7b of the contract sets forth the remedies in the event of a breach: “the non-breaching party may cancel this Contract and/or proceed against the breaching party in any claim or remedy that the non-breaching party may have in law or equity, subject to the Alternative Dispute Resolution obligations” set forth.  However, if the buyer wants to cancel the contract due to the $500 unrepaired window on a $750,000 transaction, the buyer’s broker should refer the buyer to legal counsel.