No Right of Rescission for Improved Lot
Question: We recently signed a contract to purchase a home to be built within a year on a lot in a beautiful community in north Mesa. Although we love our lot, the day after we signed the purchase contract, we realized that, because both of us work in downtown Phoenix, the daily commute would be too difficult from north Mesa.
Inasmuch as we believed we had a seven-day right of rescission after purchasing this lot, we immediately asked for our $10,000 earnest money back from the developer. The developer said we did not have a seven-day right to rescission and has refused to return our earnest money.
Does a buyer have a right of rescission after buying a lot from a developer?
Answer: The seven-day right of rescission applies only if the lot is in a subdivision and the lot is an “unimproved lot.” Although the lot you purchased was probably in a subdivision, your lot under Arizona law was not an unimproved lot but an “improved lot.”
Despite no physical improvements yet on your lot, it is an improved lot under Arizona law because there is a contract with the developer to build a home on the lot within two years. (A.R.S. § 32-2101(26).)
Therefore, you do not have a seven-day right of rescission, and the developer is entitled to your $10,000 earnest money if you refuse to perform under your purchase contract.
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