We have an agent representing both the seller and the buyer. I went into contract to buy seller financed land on June 21st. I put down a 14k deposit and removed all of the contingencies on Aug 14th. Then, I found out from the agent that the sellers cant find their 10% partner to sign off on the deal and that they had hired an investigator to find the partner. About 2 weeks ago, I got an email from the agent saying that they cant find the partner and that we can either wait or we can cancel the deal without penalty to the seller since they cant find the partner. I decided to wait and see what happens. Now its 2 weeks later and they still havent found the partner so i told the agent that I would like to cancel the deal. She responded back saying that if we cancel the deal, the seller will be seeking the 14k deposit for damages. Can they do this?
2 Answers from Attorneys
It would require a review of the entire set of documents exchanged over the course of the transaction to make a full determination of your rights. Without that, it is impossible to say exactly what your rights are. Generally, though, they cannot indefinitely postpone closing the deal. In fact you can sue for breach of contract for failure to close the deal at some point. Again, though, without seeing the exact terms of your agreement and any extensions or other modifications, there is no way to say exactly what your rights are. If you cancel before they are obligated to close, they would be entitled to the deposit under most normal real estate contracts.
They can't hold your deposit as damages if they are in breach. It sounds that they cannot close escrow because they cannot convey complete title. If they retain your deposit now, without all owners agreeing to deed the property, then I would sue the sellers and their agent for fraud.