FACTS: As part of a contract between seller and buyer, an Arizona REALTORS® On-Site Wastewater Treatment Facility Addendum was executed (“Addendum”). During escrow, the system is discovered to have operational deficiencies.  The seller agrees to make repairs pursuant to the Addendum.  The seller makes repairs that exceed 1% of the purchase price, and the system still needs more repair.

The seller notifies the buyer that seller now wants to cancel the Contract.  The Buyer does not want to cancel the Contract.

ISSUE: Can the seller cancel the Contract?

ANSWER: See discussion.

DISCUSSION:         

The Addendum states in part, “Repair Costs: Seller may cancel this Contract unless Buyer agrees in writing to pay such costs in excess of the amount that the Seller is obligated to pay.”

Therefore, if the buyer is willing to pay for the costs in excess of the 1% paid by the seller, then the seller cannot cancel and must proceed with the Contract.