Question: We live on the East Coast. In February 2020, we signed a homebuilder’s purchase contract to buy a new home in North Phoenix. We deposited $50,000 earnest money. Under the purchase contract, we had 30 days to do the inspection and to cancel the contract, or the $50,000 earnest money would be forfeited. Due to the pandemic shutdown two weeks later, there were significant travel restrictions. But we were eventually able to get a flight to Phoenix to do the inspection within the 30-day time period. My husband then got a bad case of COVID-19 and almost went on a ventilator. Everything was chaotic. In any event, we got a notice from the homebuilder a week later that the $50,000 earnest money had been forfeited because the 30 days had passed. Our daughter recently started law school, and she says that we are entitled to get the $50,000 earnest money back even four years later because COVID-19 was an “act of God.” Is she right?
Answer: Your daughter may be right! In Arizona, there are several defenses to excuse the nonperformance of a home purchase contract because of the COVID-19 pandemic. These include impossibility, impracticability, frustration of purpose and force majeure.