A Chandler seller accepts a buyer's offer that includes a clause requiring the seller to pay $5,000 toward the buyer's closing costs. At closing, the actual closing costs are only $3,500. Under Arizona law, what happens to the unused portion?
Correct Answer
C) The unused $1,500 can be applied to other buyer expenses per lender guidelines
The unused portion can be applied to other allowable buyer expenses per lender guidelines and contract terms, such as prepaid items or other closing costs. Option A is incorrect because it's not automatically applied to reduce the purchase price. Option B is incorrect because the seller agreed to pay the specified amount toward buyer costs. Option D is incorrect because there's no requirement to hold unused funds in escrow.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
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In Arizona, all of the following are common provisions in residential purchase contracts EXCEPT:
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