An agreement to sell a property was executed via the CAR forms Listing and Sale agreement. The price was $1,425,000. The Seller stated that 16 units could be developed on the property. The Seller cancelled the agreement a month later, which, according to the contract, makes him responsible to pay the full commission. I informed him of that, and stated that he should just let it expire. However, he then stated that the zoning changed and now the property is worth half million more. An offer was presented at $1,400,000 (a price he countered another person at), and he rejected it and cancelled the agreement. Now he and his attorney are claiming mutual or unilateral mistake bc of the zoning change. We obviously want him to sell it but since he won’t can we make any arguments to obtain a settlement since he violated the contract?
4 Answers from Attorneys
Since he is represented you should be too. The mistake theory here will make this complicated. Specifc performance may be difficult. You need an experienced real estate attorney versed in these types of matters.
When a seller breaches a real estate contract, the court can order him to go through with the sale at the agreed-on price. If the buyer sues, he can file a notice lis pendens, which will make other potential buyers less willing to risk buying the property while the lawsuit is pending.
But whether the seller breached is often not an easy question. Proving it can be even harder.
It sounds like you may be the realtor or broker rather than the seller. If so, you can't force the sale but you may be entitled to your commission. If the seller won't pay it, you can sue for it.
As Mr. Green said, though, you should get a lawyer ASAP.
I agree with the others that your question is ambiguous as to who you are in the transaction. It sounds like you are the broker or agent, but that is unclear. I agree completely that you need to talk to an attorney in person with the documents in front of you to get a real opinion of your case. I have 25 years of real estate experience and offer hour-long consultations, which may be all you need, at half my regular fee. And if you decide you need further assistance or representation, the consultation fee is refundable if you subsequently hire me. Your zip code shows as Fremont. I maintain facilities in downtown San Jose, as well as Palo Alto and Sunnyvale and would be happy to meet with you at any of those locations that is most convenient to you.
A zoning change isn't a proper legal basis for claiming either mutual or unilateral mistake. Nor, for that matter, would either or both parties' ignorance of the present zoning, nor the possibility that a change were in the works at city hall. Among the requirements for a contract to be found void or to be rescinded for mistake are that the mistake not result from mere negligence to determine readily-discoverable facts. Also, failure of a party or the parties to anticipate a change in conditions affecting value is not mistake in the legal sense. I don't think a defense based upon mistake will go anywhere.
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