Legal Question in Real Estate Law in California
Buyer Backed Out on Escrow Closing Day
The buyer of our condo decided not to purchase on the day escrow was ready to close! She caused numerous delays by travelling to Australia in the middle of escrow & asking for repairs beyond what was reasonable,resulting in a 30-day escrow turning into 50 days. She wanted to move in right away so we waved our 3-day post escrow move-out period. On May 6th we rented an apartment. Finally escrow was ready on May 23, though the contingency period was supposed to end on April 22nd, contingency ended May 2nd due to her trip. Once we learned that she refused to sign the loan documents we submitted a ''Demand to Close Escrow''. She responded with a ''Cancel of Purchase'' & now wants 1/2 the deposit back & we have $1700 in escrow cancellation fees! We told her no way but we can not sell the house until there is an agreement between us so the house sits empty & we have to pay mortgage + rent, which we can not afford. One problem we see in our paperwork is that we initialed by the ''Arbitration and Mediation'' portion on the Purchase Agreement that waved litigation, but we do not know under what exact circumstances that has to be followed & if we can still pursue damages if we agree to the cancellation. What are our rights? Please help!
3 Answers from Attorneys
Re: Buyer Backed Out on Escrow Closing Day
The arbitration/mediation clause does not preclude litigation. It just means that you have to follow certain procedures to resolve the matter by alternative dispute resolution prior to litigation. We would need to review your documentation and contract in order is assist you further.
Re: Buyer Backed Out on Escrow Closing Day
Certainly if your damages are substantial you should get representation to recover your losses. Call me directly at 16192223504.
Re: Buyer Backed Out on Escrow Closing Day
Your contract probably also has an attorney fee clause. If so, you should shop for a local attorney who will take the case on contingency.
The agreement to mediate and arbitrate pretty much forces you into following that sequence of events, but this isn't all bad and probably won't take longer than pursuing the matter in court would require.
Essentially, most disputes like this end up settling short of trial or arbitration award, because the party who is likely to lose will come to their senses and avoid the prevailing-party attorney fee award against them.
Your case sounds pretty strong, and a lawyer in need of new business should be willing to give you a favorable representation agreement.
I would suggest going for every dime of your losses, not just forfeiture of the deposit.
Hnadling a mediation-plus-arbitration pathway is not that complex or expensive, but you shouldn't try it without legal representation.
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