Legal Question in Real Estate Law in California

Re: Backing out of residential purchase agreement

You can say "NO" to all requested repairs by not signing the addendum, but this will not allow you to cancel the contract. The Buyer may request that you perform repairs.

Once you say "NO" to all repairs, the Buyer may decide to cancel the deal, or may not. At this point, you, or your realtor, should stay on top of the Buyer and make sure he/she performs all contractual obligations. For example, once the applicable contingency period is up, you can send the Buyer a written Notice to Perform, essentially telling Buyer to remove the applicable contingency, as required. If Buyer fails to do so within 24 hours (unless this time period was changed in the contract), then you may cancel the contract.

There are other Buyer obligations for which you can give the Buyer a Notice to Perform, for example, providing you with a pre-approval letter, and providing you with written verification of funds for down payment and closing costs. If Buyer fails to perform a required act, then you can give the Buyer a Written Notice to Perform, and then cancel if Buyer fails to perform the act within the time specified in the contract (typically 24 hours).

All of this information is based on the standard C.A.R. Residential Purchase Agreement, and assumes that the pre-printed language has not been modified.

Feel free to contact me for more information.

Re: Backing out of residential purchase agreement

Basic contract law says that responding to an offer with either a counteroffer or a purported acceptance that attempts to modify the terms of the offer amounts to a rejection of the offer, which thereafter is "off the table" and cannot be accepted even on its original terms, unless the offer is renewed by the offeror.

However, this is only true of offers, not contracts. Proposing a different contract does not cancel the existing contract.

Therefore, the new proposed deal has no effect of the prior signed deal. If the prior signed deal contains un-met contingencies, it isn't binding unless and until the contingencies are removed or waived by the party with the power to do that. However, the new proposal probably has no direct effect of removing or waiving any contingency. Therefore, I'd say the new proposal is a legal nullity unless you sign it.

You may or may not be in a position where the buyer could oblige you to specifically perform the contract, but the new proposal probably doesn't have any effect on the buyer's rights or your defenses.

Sounds like maybe the buyer would like to back out, too. That would leave only the agents, who want a commission, hoping the deal will close. By the way, you should look at your listing agreement carefully, to see at what point the agent or broker is entitled to a commission; it is sometimes possible for the agent to have earned a commission even if the seller refuses to close.

Re: Backing out of residential purchase agreement

The RPA has to be evaluated in its entirety.