Contracts
Under Arizona law, a real estate purchase contract can be 'rescinded' (versus 'terminated') when:
AEither party decides they no longer want to proceed with the transaction
BBoth parties mutually agree to cancel the contract and restore the parties to their original positions, as if the contract never existed✓ Correct
CThe seller receives a higher offer from another buyer
DThe buyer's financing falls through
Explanation
Rescission unwinds a contract entirely, returning the parties to their pre-contract positions—earnest money returned, documents cancelled, obligations released. It requires mutual agreement.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
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