Here’s another example from the Arizona real estate Industry Partners Conference detailing a real earnest money dispute between an Arizona home buyer and REO seller Fannie Mae.

The twist in this case is the “Verbal Acknowledgement Date” which is a quirk of the Fannie Mae REO Addendum. It isn’t entirely “verbal” because the “Verbal Acknowledgement Date” is (supposed to be) written right into the Addendum by Fannie Mae.


Your Buyer has accepted the Real Estate Purchase Addendum from the FNMA REO bank. Relative to the inspection provision, the Addendum reads: ” on or before 10 calendar days from the Verbal Acknowledgement Date, the Purchaser shall inspect the Property or obtain for its own use, benefit and reliance, inspections and/or reports on the condition of the Property, or be deemed to have waived such inspection and any objections to the condition of the Property and to have accepted the Property.”


The Buyer deposited earnest money on August 1st. It’s now August 25th and the Buyer writes to escrow ” I have completed my inspection and I do not wish to purchase this property. Please cancel the transaction and refund my $6,000 earnest money”.

What needs to happen to determine if the Buyer gets his money back?

  1. What is the ” Verbal Acknowledgement date”? In this particular document, there is a line that is filled in on the addendum that sets forth this date. What this date relates to is unknown by the escrow company. This would be different from what we are used to: namely, that the Contract acceptance is the date the contract is Delivered to the appropriate broker.
  2. In some of these contracts, this little line is left blank. Then the escrow company must obtain the date from the agents. It would be very important for the agents to notice this blank and establish this date early on in the escrow process.
  3. If the Verbal Acknowledgement Date is actually August 1st, then the 10 day inspection period has ended. In this case, the Buyer cannot use the inspection period as his reason to cancel and would probably forfeit his earnest money.

In this case, it sounds like the buyer got cold feet and was throwing a Hail Mary pass to see if he might get his earnest money back.

Nevertheless, this case highlights the “Verbal Acknowledgement Date” which is a weird feature of the Fannie Mae REO Addendum.

(Your comments and corrections welcome.)