Saturday, 14th of July 2012 at 12:43:26 PMSharing a little trivial information on Arizona Real Estate Contracts. This comes up from time to time, if a purchase contract is cancelled there is a question of who gets the Earnest Money that has been deposited with the escrow company. Typically the distribution is pretty straight forward. However, if there is a dispute on the funds, this distribution is determined by the escrow company. This is all spelled out in Section 3f of the standard Arizona Residential Resale Real Estate Purchase Contract:
Release of Earnest Money: In the event of a dispute between Buyer and Seller regarding any Earnest Money deposited with Escrow Company, Buyer and Seller authorize Escrow Company to release Earnest Money pursuant to the terms and conditions of this Contract in its sole and absolute discretion. Buyer and Seller agree to hold harmless and indemnify Escrow Company against any claim, action or lawsuit of any kind, and from any loss, judgment, or expense, including costs and attorney fees, arising from or relating in any way to release of Earnest Money.
Or, in plain English non-legalese speak, the escrow company decides who gets the earnest money and if you don’t like their decision there isn’t much you can do about it. Your agent should be advocating for your interests in the funds prior to the cancellation all the way to the disbursements of the funds, so be sure to communicate heavily with your agent if a contract is being cancelled.
