Seven-Day Right of Rescission Inapplicable to Vacant Lot
Question: We recently purchased from a homebuilder a lot in a beautiful Sonoran desert community in the Fountain Hills area. The construction of our home on this lot was to be completed within nine months. Although we love the lot, the next day after we purchased the lot we realized that the daily commute to our Camelback Road offices would be too difficult. We thought that under the subdivision laws we had a seven-day right to rescind the contract to purchase this vacant lot. Therefore, that next day we emailed the developer a cancellation notice to get our $20,000 earnest money back. The developer said that we did not have a seven-day right of rescission, and has refused to return our $20,000 earnest money. Does a buyer have a seven-day right of rescission if the buyer purchases a vacant lot from a developer?
Answer: There is a seven-day right of rescission under the subdivision laws if a buyer purchases a vacant lot from a developer, but this seven-day right of rescission only applies if the vacant lot is an unimproved lot. Your vacant lot is not an unimproved lot, however, but is an improved lot because there is a contract with the developer to build a home on the lot within two years. AR.S. § 32-2101(26). Therefore, the developer should be entitled to keep your $20,000 earnest money if you refuse to perform under the purchase contract.
A.R.S. § 32-2101(26). “Improved lot or parcel” means a lot or parcel of a subdivision upon which lot or parcel there is a residential, commercial or industrial building or concerning which a contract has been entered into between a subdivider and a purchaser that obligates the subdivider directly, or indirectly through a building contractor, to complete construction of a residential, commercial or industrial building on the lot or parcel within two years from the date on which the contract of sale for the lot is entered into.