Legal Question in Real Estate Law in California
Specific Performance?
I'm the seller. The buyer initiated a cancelation last week. Due to close this coming Thursday. Using standard CAR purchase contract. Here's the details:
1) Escrow opened 6/6
2) Buyer signed contingency removal form on 6/19 (within the 17 day cont. period)
3) Buyer had no repairs request
4) Termite was complete, title report, HOA docs received by buyer. Everything on my end was done within timeframes
5) 6/25, buyer's agent called escrow and sent fax requesting the buyer's cancellation. Escrow could not issue the cancellation because it wasnt in writing from the BUYER
6) 6/27, escrow receives buyer's written cancellation
7) Buyer returned signed cancellation to escrow 7/3
8) 7/2, my agent faxed and sent the buyer's agent a Demand to Close Escrow (buyer had not yet return the cancellation)
Buyer agreed to forfeit his deposit. I have not signed the cancel form. If I sign it, I will receive $1600 of the $2k deposit. $400 of it is cancel fees (non-ref).
The Demand to Close says seller may ''bring legal action against you to force you to buy the property (specific performance)''
I can put it back on market but im out so much $ already and the market is not improving. How do I ''force'' him to purchase the house?
3 Answers from Attorneys
Re: Specific Performance?
You retain an attorney to represent you in the lawsuit for specific performance. You will probably have to pay the attorney fees and then hope to collect them from the buyer. Also a lawsuit for specific performance will take at least a year and probably more.
Re: Specific Performance?
As a general rule, a seller of real property cannot force a buyer to purchase that property; however, a buyer can almost always force a seller to sell that property. This is becuase the law considers real property unique in nature. Thus, a non-defaulting buyer can generally obtain a decree of specific performance, compelling the seller to transfer the property; while a non-defaulting seller is almost always limited to the liquidated damages as per the contract.
You are using the C.A.R. forms. Every version has a liquidated damages clause that provides that upon default by buyer, the seller can keep as liquidated damages the buyer's deposit, up to 3% of the purchase price.
The lesson here for you is to only entertain offers from buyers who can deposit that 3% into escrow. $2,000 is hardly a good faith deposit.
You can sue the buyer for more, but as you will find, litigation takes a long time. Moreover, the standard CAR contract provides for (1) mandatory mediation, and (2) binding arbitration (if you agreed to it).
Good luck.
Re: Specific Performance?
Furthermore, specific peerformance is more easily obtained by a buyer when the seller refuses to honor a contract to sell than by a seller when the buyer refuses to go through with his obligation to purchase. However, you can probably get money damages BUT here are the contractual problems you must consider before deciding to sue for anything:
1. Did the parties check the "mediation" or "arbitration" boxes on the contract? If so, those procedures must be followed before suit (or instead of suit).
2. Does the contract specify that the buyer's deposit will be considered liquidated damages in the event buyer defaults? If so, that's probably all you'll get, either in arbitration or in court.
3. Is there an attorney fee clause in the contract? If so, this is very helpful to the party that is likely to prevail, whether in court or before an arbitrator.
The standard CAR forms provide boxes for the parties to agree, or not, to these provisions. Not everyone ticks the boxes to activate the provisions, but many do. Whether these provisions are applicable to your contract will determine your rights and guide your proper strategy.
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
