FACTS: Buyer and seller entered into an Arizona REALTORS® Residential Resale Real Estate Purchase Contract (“Contract”).  Three days prior to close of escrow, the buyer’s agent verbally informed the listing agent that the buyer was unable to obtain loan approval but the buyer failed to deliver notice to the seller or escrow company of the inability to obtain loan approval as required by Section 2b of the Contract. 

ISSUE: Should the seller issue a cure notice to the buyer? 

ANSWER: Yes. 

DISCUSSION:

Pursuant to Section 2c of the Contract, if the buyer fails to deliver notice of inability to obtain loan approval: “Seller may issue a cure notice to Buyer as required by Section 7a and, in the event of Buyer’s breach, Seller shall be entitled to the Earnest Money pursuant to Section 7b.  If, prior to expiration of any Cure Period, Buyer delivers notice of inability to obtain loan approval, Buyer shall be entitled to a return of the Earnest Money.”  Therefore, the seller should issue a cure notice to the buyer for the failure to deliver notice of inability to obtain loan approval.  Note: AAR has a standard Unfulfilled Loan Contingency Notice form that buyers may utilize for delivering the required notice.