In the purchase contract, there are MANY items that both parties are responsible to follow. If you do not follow these terms of the contract, you may be in breach. However, according to the Arizona Purchase Contract, if you are outside of the terms of the contract, you are only in “Potential Breach”. There is NO automatic Breach to the Arizona Purchase.

What do you do when someone is in potential breach?

When the cross party is in potential breach of the contract, ie, they have not provided loan documents to title, they did not submit their inspection results, they did not provide a loan status update (LSU), you may send them a  Cure notice.

A Cure notice is a form that your agent will provide, detailing which lines of the contract the opposing side is in potential breach on. Remember, this is specific to the terms in the contract, and must be specified.

Only a Non-Breaching  party can issue a cure. This is not something that you can ‘cure back’ if you ‘want to play hard ball’.

Should you ALWAYS cure?

No. Every situation is unique and not every potential breach should be ‘cured’. Talk with your agent to decide the right strategy for your unique situation.

Once cured, the opposing party has 3 days to resolve their potential breach, or they become “In Breach of Contract”. This does NOT mean that the contract is automatically cancelled. At that time, parties must come together and decide what to do next… extend that time frame, cancel or change a term in order for both parties to move forward.  This would be done on a separate addendum, which then becomes part of the contract.

What happens if a cure becomes a breach?

If the non breaching party decides to cancel the contract, a notice would be sent over to the escrow office to decide what happens with the earnest money. In fair and honest dealings, the escrow officer must decide, according to terms laid out in the contract, which party deserves the earnest money. Please do not assume that this will work out in your favor, or that the escrow agent will not make a mistake. This notice must be submitted by your agent and your agent should make sure to ‘build your case’ to ensure the earnest money is distributed accordingly.

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