In the purchase contract, there are MANY timeframes and responsibilities for both parties 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, whether they have missed a deadline, or did not complete a task, as outlined in the agreement, 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 of.

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?

Technically, if you’re following the terms of the contract, you should cure for all potential breach’s. In actual practice, not all parties will choose to do so.  In some cases, the resolve is already under way and you may not feel that a notice of potential breach is warranted.

Once cured, the opposing party has 3 days to resolve their potential breach, or they become “In Breach of Contract”. At this point the non breaching party may choose to cancel the contract and potentially retain the earnest money, or they may choose to move forward and allow for more time for the party to resolve the issue. A mutual resolve should be spelled out in an addendum.

Does Curing mean you have to cancel?

No. By curing the other party, you are simply giving notice that there is a potential breach. Since the contract states that this is the correct course of action, it is best to take this step, so that you are covered if legal action is required down the road.

What happens if a cure becomes a breach?

After the cure notice time period has run out, the non breaching party may decide to cancel the contract. A notice would be sent over to the escrow office, giving notice of cancellation. The Escrow agent is in charge of releasing the earnest money, in accordance to the contract. A party in Breach of contract may not have claim to the earnest money.

You should not assume that this will work out in your favor, or that the escrow agent will not make a mistake. This notice of cancelation  must be submitted by your agent and your agent should make sure to ‘build your case’ to ensure the earnest money is distributed accordingly.

Do you have to cancel?

No. This is the biggest fear that people have.  Just because you have given notice of potential breach, it does not mean that you have to walk away. Giving the cure notice shows that you are following the terms of the contract and expect the same of the other party. It may also protect you if a battle for the earnest, or the closing ensues.

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