As seen in the Arizona Republic

Question: I purchased a home in Chandler in June but was unable to qualify for the loan. My contract called for me to get my $1000 earnest money deposit back if I couldn’t qualify. Now, the seller is demanding to keep the money. What can I do?

Answer: Disputes between buyers and sellers occasionally occur. Earnest money disputes are the most common of these disputes. Other disputes that come up center around property condition problems, who’s paying for what, and closing dates. Most people are uncomfortable with confrontation. Yet, there are many times that a problem turns into a huge one because we don’t want to sit down and talk to each other. There are some positive steps that you can take to address these problems.

First, talk to your real estate agent. The agent may have exactly the right answer and it may involve simply talking to the seller’s agent. Your agent may also suggest an informal meeting between you and the sellers and your respective agents and brokers to try to come to an agreement. It may simply be a matter of misunderstanding that open communication can fix.

Second, if this approach is unsuccessful, initiating a mediation request is the next step. It’s likely that the purchase contract you used is one developed by the Arizona Association of REALTORS® (AAR). The contract contains a mediation clause where signatories to the contract agree to submit most disputes to mediation prior to seeking legal action or other dispute resolution alternatives such as arbitration.

What is mediation? Mediation is all about sitting down and talking to each other with an objective third party and coming up with a resolution that works for everyone. A successful mediation allows the parties to avoid that unpleasant feeling many get after a confrontational arbitration hearing or a court action.

The mediator does not hand down a decision, but simply facilitates a resolution that the parties reach. If the parties don’t reach a resolution, they are free to go forward with either arbitration or litigation. If an agreement is reached, it is reduced to writing and signed by all parties. The agreement then becomes legally enforceable.

The cost of mediation varies based on the length of the mediation, and is split equally by the parties. If your dispute concerns an amount of money less than $3500, which may not justify paying for mediation expenses, you may consider filing a small claims action in your local Justice Court, which handles civil claims of less than $3500.

If mediating your dispute with the seller doesn’t work, you may need to file a legal action. But, try mediation first…not only is it required by the standard contract, but you’ll find that it’s quick, inexpensive, and often results in win-win situations for everyone.

To find out more about mediating your real estate dispute, you can contact AAR at 602/248-7787, or you can locate mediation information on AAR’s website,

Updated: January 27, 2014