Seller Can Reject Buyer’s Demand For Only Licensed Contractors

Question: We are purchasing a home in North Phoenix using the Arizona Association of Realtors® Residential Resale Real Estate Purchase Contract (“AAR Purchase Contract”). Our home inspector gave us a list of repairs that need to be done to the home. We then submitted a Buyer’s Inspection Notice and Seller’s Response (“BINSR”) with a list of repairs to the seller as provided in the AAR Purchase Contract, and requested that all these repairs be done by a licensed contractor. The seller’s listing agent said that under the AAR Purchase Contract the repairs only have to be done in a “workmanlike” manner, and do not have to be done by a licensed contractor. If the seller does the repairs that we have requested, but refuses to have the repairs done by a licensed contractor as we requested, can we cancel the purchase contract?

Answer: Probably not. The BINSR should have been completed properly by the buyer, and submitted to the seller. In addition, the buyer should submit to the seller an amendment to the AAR Purchase Contract to require a licensed contractor do the BINSR repairs. Unless the seller agrees to this amendment, however, the repairs requested in the BINSR do not have to be done by a licensed contractor. In the past a BINSR has frequently been used by a buyer to request repairs or, alternatively, to request a cash credit to the buyer to reduce the purchase price, e.g., $5,000 cash credit, with no repairs by the seller. This alternative $5,000 cash credit is an offer to amend the AAR Purchase Contract, and should be on a separate amendment to the AAR Purchase Contract. The seller can then accept the offer to amend the AAR Purchase Contract by taking $5,000 cash in lieu of the seller making any repairs requested by the buyer in the BINSR.

Note: Under Arizona law repairs to a home generally must be done by licensed contractors. There is a “handyman” exception, however, for doing minor repairs not required by a building permit and with a cost of less than $1,000. A.R.S. §32-1121(A)(14).