FACTS: The seller and buyer executed an Arizona REALTORS® Residential Resale Real Estate Purchase Contract (Contract).  In the Contract, the seller agreed to pay the appraisal.  Buyer is now cancelling the contract based on the appraisal contingency due to a low appraisal.  Seller is demanding to see the appraisal because seller paid for the appraisal.

ISSUE: Is the buyer required to disclose the appraisal to the seller?

ANSWER: No.

DISCUSSION:

Even though the seller chose to pay for the appraisal, the mortgage lender orders the appraisal and is the appraiser’s client; not the seller.  Pursuant to the Equal Credit Opportunity Act, the lender is required to automatically send a free copy of the home appraisal and all other written valuations on the property after they are completed to the applicant (aka buyer).

Pursuant to Section 2l of the Contract, if the Premises fail to appraise for the purchase price in any appraisal required by lender, the Buyer has five (5) days after notice of the appraised value to cancel this Contract.  Therefore, the Buyer is only contractually bound to send a cancellation, not the actual appraisal report, to the Seller to assert the appraisal contingency.