Legal Question in Real Estate Law in California

I entered Escrow on Feb 8th for a Short Sale Contract that was in place since October 13, 2009. Listing Agent reached out to us as 1st Lender's approval was around the corner. By Feb 24th we received approval from 2nd Lender which stated we have to close in 30 days. Then Seller comes to us asking that he wants to rent back for 90 days as his kids are in School. We agree but ask him to explore more options if possible. He then comes back asking for $5000 in Cash to move out 3 days + COE, instead of rent back. We agreed, signed addendum (kinda extortion from seller huh). Then the seller tells Listing agent that he found a lawyer who will help him with Loan Modification. First of all, this guy was declined once for loan mod. then he was on auction list for foreclosure, to avoid that, he started Short Sale Process and now that the Short Sale is approved, he does want to complete the contract and back out????? What are my options???? Can I file Suit for Specific Performance???? I have to close by 03/25/2010. Please advice.


Asked on 3/08/10, 10:09 pm

2 Answers from Attorneys

I can't give you conclusive advice without seeing all the deal paperwork, but I would have issued a demand for performance instead of paying the $5K. I'm not sure what extortion there was. What could he have done if you said "no?" It doesn't sound like your agent is taking very good care of you. If the short sale approvals are all in, are there any seller contingencies that the seller can claim are not met? If not, then the seller is bound to the deal and is liable for breach of contract if they try to back out. The only problem is you can't sue for specific performance unless the seller says they are pulling out, or the time for close of escrow comes and goes and the seller does not perform.

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Answered on 3/13/10, 10:55 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Sounds to me as though the seller may lose the property through the short-sale agreement cratering before your specific performance case would ever come up for trial, in which case you would be unable to get any relief other than money damages. Several questions then come to mind. With so many properties on the market, why pursue this particular one? And if you really want this particular house, perhaps letting it go into foreclosure and bidding at the trustee sale is a viable approach for you - it takes cash, but you might be able to prearrange that with the bank, and the bank is probably not going to bid it up.

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Answered on 3/14/10, 11:01 am


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