Ratliff v. Hardison

199 P.3d 696 (2008)

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Nature of the Case

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Facts

D entered into a contract to purchase 1,020 acres of farmland in Cochise County from P for $3,500,000. D deposited $ 100,000 of that amount in escrow as earnest money. The agreement provided an escrow closing date of August 1, 2006. Both parties to the transaction were represented by a real estate broker, Earl Moser. In February or March 2006, D learned about A.R.S. § 33-422, which requires, in certain circumstances specified in the statute, that the seller of land execute an affidavit disclosing information about the property at least seven days before it is transferred. When required, the affidavit must include information about the ownership and access to roads, flood plain designation, utility services, and zoning. Upon receipt of the affidavit, the buyer has five days to rescind the sales contract. In February 2006, the title insurance agency issued its commitment for title insurance, stating it had not made a determination of whether the transaction was subject to § 33-422 and that it was the parties' responsibility to do so. D believed the statute applied to this transaction, but he neither mentioned this belief to P or Moser nor inquired about the affidavit. On July 22, D left P the following telephone message: What I'd like to do, Buddy, is buy that section of deeded land and section of state land and offer you an additional $ 1.5 million on top of the $ 100,000 we've given you. We're sorry about the offer, but we're--we're really negative in what we see around here. I just thought (indiscernible) and maybe we can negotiate, and arm wrestle or whatever it takes, and see if we can make a deal, maybe not. . . . D testified that, 'toward the end of July,' he had decided not to purchase 'the farm' and notified both P and his banker of that decision as well. After escrow did not close on August 1, P's attorney sent D a letter demanding that the sale close by August 9, stating that if it did not, litigation would follow. On August 9, P and D spoke on the telephone and D said he still wanted to purchase the land, but he wished to re-negotiate the terms of purchase, at a reduced price or to buy only a portion of the land. P refused. On August 15, D stated he was unable to close on the farm. He said he still wanted to purchase it but was too 'chicken shit' to go through with the deal because of uncertainties in farming and the real estate market and his inability to sell another property he owned. On August 25, P sent a letter to D advising him the contract would be canceled in thirteen days unless the sale closed and advised the title agency of the pending cancellation. D responded on August 30 with a written demand for an affidavit of disclosure pursuant to § 33-422, stating that D would 'advise of his intentions with respect to completing the transaction' after he received the affidavit. P's attorney rejected the demand and accused D's attorney of 'trying to trick P into sending you an inapplicable disclosure affidavit so you can send a notice of rescission.' P sued D for damages. D filed a counterclaim seeking a declaratory judgment that § 33-422 applied to the transaction, entitling him to the return of his $100,000 earnest money deposit. The court granted P summary judgment and D appealed.