FACTS: The parties executed an Arizona REALTORS® Residential Resale Real Estate Purchase Contract (“Contract”).  The Contract was contingent on the buyer selling their home.  Pursuant to the terms of the Contract, the buyer agreed to deposit funds with the title company three days prior to close of escrow.  The buyer failed to deposit funds with the title company three days before close of escrow and the seller sent a three-day Cure Period Notice to the buyer for failing to do so.  During the three-day cure period, the buyer still failed to deposit the funds with the title company.  After the three-day cure period had ended, the buyer attempted to cancel the transaction.  Thereafter, the title company cancelled escrow and gave the earnest money deposit to the seller.    

ISSUE: Was the buyer entitled to return of her earnest money when she attempted to cancel the Contract after the three-day cure period ended?

ANSWER: No.

DISCUSSION:

Pursuant to the terms of the Contract, the buyer agreed to deposit funds with the title company three days prior to close of escrow.  When the buyer failed to deposit the funds, she was in potential breach of the Contract.  Once the seller gave the buyer a three-day Cure Period Notice, the buyer could have cured the potential breach by depositing the funds within three days.  The buyer also could have cancelled the contract within the three-day cure period if the contingency to sell their home had not yet been met.  Because the buyer failed to do anything until after the three-day cure period was over, the buyer breached the Contract.  As the non-breaching party, the seller had a right to cancel the contract and keep the earnest money as the seller’s sole right to damages.