## Facts

- A buyer agreed in writing to purchase 1,020 acres of farmland in Cochise County, Arizona for $3.5 million and deposited $100,000 in escrow as earnest money.
- The contract set an escrow closing date of August 1, 2006, and both parties used the same real estate broker.
- Months before closing, the buyer learned of A.R.S. § 33-422 (affidavit of disclosure for certain land sales) and believed it applied, but he did not tell the seller or broker, and did not request the affidavit.
- Shortly before closing, the buyer left a message proposing materially different terms and indicating reluctance to proceed under the existing deal.
- Near the end of July, the buyer decided not to buy the farm and told the seller and his banker he would not go forward.
- Escrow did not close on August 1; the seller demanded closing by August 9 and threatened litigation if it did not occur.
- The seller sued for breach of contract damages; the buyer counterclaimed for a declaration that § 33-422 applied and sought return of the $100,000 earnest money based on an asserted statutory rescission right.
- The trial court granted partial summary judgment for the seller on the contract claim and rejected the buyer’s statutory defense and counterclaim.

## Issues

1. Whether the buyer’s pre-closing communications and failure to close constituted anticipatory repudiation and breach as a matter of law.
2. Whether A.R.S. § 33-422 applied to the transaction and, if it did, whether the seller’s alleged failure to provide an affidavit excused the buyer’s performance or entitled him to rescind and recover the earnest money.

## Decision

- The Arizona Court of Appeals affirmed the partial summary judgment for the seller.
- The court held the buyer anticipatorily repudiated and breached the contract by clearly indicating he would not perform as agreed and then failing to close.
- The court held A.R.S. § 33-422 did not provide the buyer a basis to avoid liability or reclaim the earnest money on these facts, particularly given his failure to timely raise the issue and his independent repudiation.
- Because material facts about the buyer’s communications and nonperformance were undisputed, summary judgment was proper.

## Legal Principles

- Anticipatory repudiation occurs when a contracting party unequivocally manifests an intent not to perform future contractual obligations; repudiation may be found from clear statements or conduct inconsistent with performance.
- A party who has repudiated a contract cannot later rely on the contract (or related statutory mechanisms) to escape the consequences of the repudiation.
- A.R.S. § 33-422 functions as a disclosure-and-rescission mechanism tied to the affidavit process; it is not a general escape device for a buyer who abandons the deal for non-statutory reasons.
- Summary judgment is appropriate in contract disputes when undisputed communications and conduct establish breach or repudiation as a matter of law.

## Conclusion

The court enforced the land-sale contract by holding the buyer’s pre-closing refusal to proceed on the agreed terms was an anticipatory repudiation and breach, and it rejected the buyer’s attempt to use A.R.S. § 33-422 to rescind or recover earnest money after he had already repudiated.


Ratliff v. Hardison, 199 P.3d 696 (Ariz. Ct. App. 2008)