Legal Question in Real Estate Law in California

buyer cancellation and deposit disposition

Our contract was signed by buyer on 2/14 and then it was signed by us (sellers) and delivered on 2/25 before the 9pm deadline. Escrow was opened. a $2000 deposit was made by the buyer. The purchase price was $500,000. Section 14 of the purchase agreement had no adjustments made to it. Section 16 was initialed by all. On 3/14 we received a letter requesting four small repairs (water heater strap adjustments, garage door opener adjustment, etc.) It was faxed to our agent at 10:11pm. On 3/16 our agent called us (we are in NC) to inform us the buyer has cancelled late the previous night on 3/15. The only explanation we have been able to get is the commute is too far and the family room is a little too small. I have two questions. 1) is the buyer entitled to a deposit refund? 2) Is the buyer in breach of contract since she cancelled after 17 days? There was one contigency on the sale of her house, but her sale is proceeding on time. She has also begun viewing homes with a completely new agent? Her actions are confusing, because she was very excited about the house and ready to close up until 3/15 pm late.

Escrow was set to close on 3/30.


Asked on 3/19/07, 1:40 pm

2 Answers from Attorneys
Anthony Roach Law Office of Anthony A. Roach

Re: buyer cancellation and deposit disposition

The buyer is in breach and you are entitled to damages. The issue here is whether you stipulated to liquidated damages. It is the law in California that the seller may look to the earnest money deposit as a source of funds to apply to the buyer's breach.

You are referring to sections in your contract that are not in front of any of the attorneys who read your post, so it is hard to give you a full, definitive answer without reading the contract. I am assuming that you are referring to a CAR (California Association of Realtors) but this is only an assumption.

Very truly yours,

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Answered on 3/19/07, 2:17 pm
Robert Mccoy Law Office Of Robert McCoy

Re: buyer cancellation and deposit disposition

Probably, there is a liquidated damages clause in your contract which says the deposit consitutes your damages in the event of buyer breach. So, tell the buyer to release the deposit from the escrow to you. If the buyer refuses, you may go to small claims court to get an order releasing the funds.

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Answered on 3/19/07, 4:39 pm


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