FACTS: The buyer and seller executed the Arizona REALTOR® Residential Resale Real Estate Purchase Contract (the “Contract”) in connection with an all-cash sale.  Section 2j of the Contract provides that the seller will provide the buyer a 5% credit.  The day before the close of escrow, the buyer and seller are disputing the 5% credit.  The seller claims that because it is an all-cash sale, Section 2 does not apply.  Therefore, the 5% credit written in Section 2j also does not apply.  The buyer contends that the intent was clear, regardless of where in the Contract the 5% credit appears.

ISSUE: Is the buyer entitled to the 5% credit?

ANSWER: See Discussion. 

DISCUSSION:         

In interpreting contracts, courts are required to give meaning to all the language used and give effect to each part.  Cardon v. Cotton Lane Holdings, 173 Ariz. 203, 841 P. 2d 198 (1992).  Granted, the 5% credit is in Section 2 which the Contract states “does not apply” if the offer is “AN ALL CASH SALE.”  However, ignoring the 5% credit, especially since the seller did not clarify the issue by a counteroffer or otherwise prior to signing the Contract, would remove a contract term entirely and could not reflect the intention of the parties.  A court would probably find that the buyer is entitled to the 5% credit.  Note: Best practice would be to avoid Section 2 altogether when making an all cash offer or having the seller clarify any terms inserted in Section 2 in a Counter Offer form.