Legal Question in Real Estate Law in California

Buyer backing out of home sale after seller signed and before escrow

What am I entitled to when I have a signed home purchase contract and the buyer decides to back out?

I have a signed contract for the sale of my home in California and the buyer has decided to back out of the deal. Escrow has not opened yet and I am wondering if I am at least entitled to the deposit the buyers put down. They still have control of the deposit check.

Asked on 3/11/02, 11:12 am

5 Answers from Attorneys

Victor Hobbs Victor E. Hobbs
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Re: Buyer backing out of home sale after seller signed and before escrow

First there's negotiation. Then comes the offer and acceptance. If your signing the contract is the offer (sometimes happens that way) then there was no acceptance. And it wasn't a done deal. However if your signing the contract was the acceptance. Then I believe you'd be entitled to recover the deposit. Realistically they could have tied up the property. And then discovered they didn't qualify during the escrow. Which would have caused it to drop out of escrow. How do you find out if your signing was the offer or the acceptance? You sue them and the judge will tell you what it was. From the few facts you set forth it sounds to me like your signing was the offer; and there was no deal, and no security (down payment) to recover against. However, the law turns on the facts, and additional facts can change the scenerio.

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3/11/02, 11:35 am
Larry Rothman Larry Rothman & Associates
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Re: Buyer backing out of home sale after seller signed and before escrow

Assuming that your paperwork shows a valid contract, you could file an action for specific performance and file a lis pendens. I would be glad to review your agreement/deposit/receipt without charge if you fax it to me at 714 363 0229 along with your phone number.

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3/11/02, 12:02 pm
Joel Selik www.SelikLaw.com
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Re: Buyer backing out of home sale after seller signed and before escrow

You have several possible damages. It may be the deposit amount, it may be the costs to resell and any difference in the price you get. You may be able to force sale but judges are not big on ordering that.

Joel Selik

Attorney At Law

Real Estate Broker

800-894-2889

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3/11/02, 12:28 pm
Ken Koenen Koenen & Tokunaga, P.C.
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Re: Buyer backing out of home sale after seller signed and before escrow

Based on what you are saying, you are the seller. If that is correct, you cannot sue for specific performance.

Now, if this was a typical home purchase contract, there are about a dozen contingencies that a buyers can use to get out of a contract. If they get a pest inspection or property inspection, they can simply disapprove of the reports.

The bottom line is that you should be glad that the buyer backed out now, rather than 3 weeks into the escrow.

Just go find another buyer, and forget this one.

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3/11/02, 2:42 pm
William McPhee W. Allan McPhee
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Re: Buyer backing out of home sale after seller signed and before escrow

Real Estate Transactions must be in writing. The Standard Deposit Receipt Contract provides for the contingency you describe. Read the Contract to determine whether that portion of the Standard Contract was completed.

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3/11/02, 3:17 pm

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