What is the primary purpose of an appraisal contingency clause in Arizona real estate contracts?
Correct Answer
D) To allow the buyer to cancel if the property doesn't appraise for the contract price
Correct: D - To allow the buyer to cancel if the property doesn't appraise for the contract price. An appraisal contingency allows the buyer to cancel the contract if the property doesn't appraise for at least the contract price, protecting them from overpaying. Why not A: This option is incorrect because "To require the seller to obtain a professional appraisal before listing" does not match the rule tested by the question. The correct answer is "To allow the buyer to cancel if the property doesn't appraise for the contract price". An appraisal contingency allows the buyer to cancel the contract if the property doesn't appraise for at least the contract price, protecting them from overpaying. Why not B: This option is incorrect because "To ensure the property taxes are current and paid" does not match the rule tested by the question. The correct answer is "To allow the buyer to cancel if the property doesn't appraise for the contract price". An appraisal contingency allows the buyer to cancel the contract if the property doesn't appraise for at least the contract price, protecting them from overpaying. Why not C: This option is incorrect because "To guarantee the buyer's loan will be approved by the lender" does not match the rule tested by the question. The correct answer is "To allow the buyer to cancel if the property doesn't appraise for the contract price". An appraisal contingency allows the buyer to cancel the contract if the property doesn't appraise for at least the contract price, protecting them from overpaying.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
More Az Contracts Questions
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A Mesa buyer includes an inspection contingency in their contract with a 10-day inspection period. On day 8, the buyer discovers significant plumbing issues and wants to negotiate repairs. The seller refuses all repair requests. What is the buyer's best course of action under Arizona law?
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A Scottsdale buyer's contract includes a clause stating 'Seller to provide a home warranty at closing.' Three days before closing, the seller informs the buyer they will not provide the warranty. Under Arizona contract law, what are the buyer's options?