Legal Question in Business Law in California

As Buyer, I deposited $200,000 into escrow with the Seller for the purchase of Seller�s California LLC and business. I additionally paid $18,700 to the Seller to cover his rent and obtained a promissory note for this amount through escrow as well towards the purchase of Seller�s type 47 liquor license.

I have signed to cancel escrow but Seller is not willing to sign mutual cancellation agreement to release my funds. The LLC I was purchasing has been suspended by CA Secretary of State during the entirety of this transaction and remains so currently. Currently the Seller wishes me to sign a document through escrow that renders the $18,700 I had paid him for his rent non-refundable, upon which he will sign to release the $200,000 from escrow.

I have a signed document from the Seller addressed to me stating that he will release the $200,000 if we comply with his demands as mentioned and additionally I have a document drafted with the escrow company that would simultaneously perform (1) release of my $200,000 from escrow and (2) render the $18,700 I had paid towards the liquor license non-refundable.

Is this considered extortion on the Seller�s part? Can I sign this document and get back my $200,000 knowing that it is not enforceable and sue him in court for extortion and get back my $18,700 or at least obtain the original intent of my $18,700 which was to receive the liquor license in exchange?


Asked on 9/07/16, 10:41 am

2 Answers from Attorneys

No. Not even close to extortion. Extortion requires force or threat of harm, or disclosure of something the victim needs to keep secret. In fact, if you go through with your agreement regarding the escrow release, knowing you intend to back out, you will have committed fraud.

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Answered on 9/07/16, 11:02 am
Edward Hoffman Law Offices of Edward A. Hoffman

I generally agree with Mr. McCormick. But depending on what your contract says and on precisely what happened, you might later be able to argue that you only agreed to release the $18,700 under duress and that you should get the money back. I don't know whether the facts would support this argument, but they might. You should discuss the details of your case with a lawyer and see what he or she thinks.

Good luck.

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Answered on 9/07/16, 11:37 am


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