Legal Question in Real Estate Law in California

Re: Buyer failure to perform with 1 week left to close escrow

If you used the standard CAR home sell contract there is a liquidated damages clause in the contract that says your damages are the deposit (so long as the deposit does not exceed 2 percent of the purchase price). In some instances you may sue for other damages, but these lawsuits are generally pretty tough and the odds of winning are so small that it is rarely worth the money and time spent to pursue them

Re: Buyer failure to perform with 1 week left to close escrow

In theory, a seller could ask for specific performance - i.e., an order obliging the buyer to complete the purchase - just as a buyer can sue the seller for specific performance. In the real world, sellers are almost never awarded this remedy, especially in residential purchase contract situations.

I don't have a CAR contract in front of me, but I thought the California ceiling on liquidated damages was 3%, not 2%. If your deposit is 3% or less of the selling price, you should be entitled to keep it all. You might want to look up Civil Code sections 1671 through 1681, with particular emphasis on 1675, to get an overview of the law on liquidated damages.

You should also look to see whether you and the buyer checked any boxes relating to mediation or arbitration of disputes, which could affect the procedures required if you weren't satisfied with the liquidated damages.

The problem with getting involved in mediation, arbitration or a lawsuit at this point is the time and expense necessary to bring the matter to a conclusion, even if that conclusion is a voluntary out-of-court settlement. Meanwhile, the house sits in limbo.

Maybe your broker can offer some suggestions. The buyers probably don't want to forfeit their deposit.