Buyer’s Options if Seller Refuses to Close

Question: We have been renting a home in Peoria since we moved here from Buffalo. Last month we signed a contract to buy a home in our same neighborhood from an investor who is “flipping” the home after doing major improvements. The investor is now refusing to close on the sale of the home to us because the investor has a higher offer. Our real estate agent says that under our purchase contract we are required to mediate before filing a lawsuit, but the investor refuses to return any of our real estate agent’s phone calls to discuss mediation. How long do we have to wait for the investor to agree to mediate?

Answer: The Arizona Association of Realtors® form purchase contract includes a provision requiring buyers and sellers to mediate disputes prior to filing a lawsuit. However, if a seller fails to respond to repeated requests to mediate within a reasonable time, e.g., 10 days, the buyer can then file a lawsuit. The lawsuit would be for money damages (money damages normally are based on a higher cost for a similar home), or for a court order that would require the seller to sell the home to the buyer.

Note: In order to prohibit a seller from selling the home to another buyer with a higher offer, the purchase contract allows the first buyer to immediately file a lawsuit against a seller to enable the recording of a notice of lis pendens (Latin for “pending litigation”). The seller would then not be able to sell the home to another buyer with a higher offer, and at that time the first buyer will have time to request mediation.

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